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iminal Appeal No. 19 of 1957.
Appeal by special leave from the judgment and order dated March 7, 1956, of the former PEPSU High Court in Criminal Revision No. 45 of 1956, arising out of the judgment and order dated February 22, 1956, of the Additional Sessions Judge, Patiala, in Criminal Appeal No. 175/36 of 1955 56.
Pritam Singh Safe&, for the appellant.
N. section Bindra and T. M. Sen, for the respondent.
April 21.
The Judgment of the Court was delivered,by KAPUR, J.
This is an appeal by special leave against the judgment and order of the High Court of PEPSU passed in revision '.
The appellant was a sub Inspector of Police who at the relevant time was the Station House Officer in charge Shehna police station in the erstwhile PEPSU State.
He was convicted under section 193, Indian Penal Code, by a First Class Magistrate and his appeal to the Sessions Judge, Patiala, was dismissed except as to sentence.
He took a revision to the PEPSU High Court but that was also dismissed.
This appeal has arisen in the following circumstances: One Surjit Singh, s/o Risaldar Waryam Singh, was arrested on September 25, 1953, at Barnala in PEPSU State by the Police Inspector Jaswant Singh.
He was kept in the lock up at Barnala and on the following day his custody was handed over to the appellant and he was taken to Shehna and was kept in custody it 729 is not clear under what section in the police station lock up at Shehna.
Surjit Singh was there kept in custody from September 26, 1953, till October 10, 1953, when at about 10 p.m., he was surreptitiously removed to Police Station Dialpur and then to Police Post Hamirgarh and from there was taken to Police Station Baga Purana in Ferozepur District, of the then Punjab.
An application under section 491 of the Criminal Procedure Code and under article 226 of the Constitution was made for a writ of Habeas Corpus and Mandamus in the High Court of PEPSU.
In that petition it was alleged that Surjit Singh was being kept in unlawful custody without any charge being made and without obtaining a remand by a Magistrate.
In reply to this, an affidavit dated October 13, 1953, was filed by the appel.
lant in which he stated that Surjit Singh had association with notorious dacoits; that he, the appellant, had never taken him into custody at any time; that the said Surjit Singh was absconding and had not been arrested in spite of the best efforts of the police; that at the time of the making of the affidavit he was not in the appellant 's custody and that it was incorrect that Inspector Jaswant Singh had ever entrusted Surjit Singh to his (appellant 's) custody.
He also stated that no petition had been brought to him nor had he received any telegram in connection with the custody of Surjit Singh.
This affidavit was affirmed as follows: " I solemnly affirm that the facts stated from paras Nos.
I to 7 are true to the best of my knowledge and belief and nothing which is relevant to this case has been kept back from this Hon 'ble Court ".
As both the parties admitted before the High Court that Surjit Singh was not in the custody of the appellant the petition was dismissed.
On November 9, 1953, the brother of Surjit Singh made an application under section 476, Criminal Procedure Code, for the prosecution of Inspector Jaswant Singh and the appellant for perjury under section 193, Indian Penal Code, in that they had filed false affidavits.
This matter was heard by another learned Judge of that Court who ordered the 92 730 prosecution of the appellant and directed the Registrar of the High Court to file a complaint which was filed.
The complaint was taken cognizance of by the First Class Magistrate at Patiala who convicted the appellant and sentenced him to nine months ' imprisonment and a fine of Rs. 300/ and in default to undergo simple imprisonment for two months.
The appellant took an appeal to the Sessions Judge, Patiala, who confirmed the order of conviction but reduced the sentence to one of three months ' simple imprisonment and a fine of Rs. 50 and in default one month 's simple imprisonment, a revision against this order was dismissed in limine by the Chief Justice although he gave reasons for dismissing it.
The appellant then obtained special leave from this Court.
On behalf of the appellant the first contention raised was that the appellant was not bound to file an affidavit and therefore he could not be convicted under section 193, Indian Penal Code, because his case did not fall under section 191, Indian Penal Code.
In support of his contention he relied upon the Rules of the PEPSU High Court framed for the purpose of proceedings under article 226 and section 491(2), Criminal Procedure Code, for the issuing of writs of Habeas Corpus.
He also referred to the Rules made by that Court for the issuing of writs of Mandamus, Prohibition, Quo Warranto and Certiorari under article 226 and submitted that there was no Rule in the former, i.e., for writ of Habeas Corpus requiring a return to be made on behalf of the res pondent to be sup ported by an affidavit whereas in the latter, i.e., issuing of writs of Mandamus etc.
an affidavit was necessary and therefore it was submitted that section 191 was inapplicable.
Rule 2 of the Rules of the Court required that when a Judge was of the opinion that prima facie case had been made out for granting the application a rule nisi was to issue calling upon the person or persons against whom the order was sought, to appear before the Court and to show cause why such an order should not be made.
As has been pointed out in Greene vs Home Secretary (1) which was a case under Reg.
18 B of the Defence of the (1) , 302. 731 Realm Act the whole object of proceedings for a writ of Habeas Corpus is to make them expeditious, to keep them as free from technicality as possible and to keep them as simple as possible.
" The incalculable value of Habeas Corpus is that it enables the immediate determination of the right to the appellant 's freedom " (Lord Wright).
When there is no question of fact to be examined or determined no affidavit is needed.
As soon as there emerges a fact into which the Court feels it should enquire the necessity for an affidavit arises.
Ordinarily an affidavit may not be necessary in making the return if the detention is under orders of the detaining authority in exercise of its plenary discretion as in Liversidge vs Anderson (1) and in Greene 's case (2) or a person is detained under the orders of a Court.
But where the detention is, as it was in the present case, it becomes necessary for the detaining authority to justify its action by disclosing facts which would show to the satisfaction of the Court that the custody is not impro per.
Where the prisoner says " I do not know why I have been detained, I have done no wrong ", it is for the detaining authority to justify the custody.
When issues of fact are raised and the actions of the police officers, as in the present case, are expressly challenged and facts are set out which if unrebutted and unexplained would be sufficient for the writ to issue, an affidavit becomes necessary.
It cannot be said therefore that in the present case the appellant was not legally bound to place facts and circumstances before the Court to justify the detention of Surjit Singh and, this could be done by an affidavit.
Section 4 of the Oaths Act lays down the authority to administer oaths and affirmations and it prescribes the courts and persons authorised to administer by themselves or by their officers empowered in that behalf oaths and affirmations in discharge of the duties or in exercise of the powers imposed upon them and they are, all courts and persons having by law the authority to receive evidence.
Section 5 prescribes the persons by whom oaths or affirmations must be (1) ; (2) , 302. 732 made and they include all witnesses, i. e., all persons who ' may lawfully be required to give evidence by or before any court.
These two sections show that the High Court or its officers were authorised to administer the oath and as the appellant was stating facts as evidence before the High Court he had to make the oath or affirmation and was bound to state the truth.
Section 14 of that Act is in the following words: section 14.
Every person giving evidence on any subject before any Court or person hereby authorised to administer oaths and affirmations shall be bound to state the truth on such subject ".
As the appellant was giving evidence on his own behalf in that he was denying the allegation made in the affidavit of the brother of Surjit Singh he was bound to state the truth on the subject on which he was making the statement.
The contention therefore that under section 191 of the Indian Penal Code the relevant portion of which is: section 191.
" Whoever being legally bound by an oath or by an express provision of law to state the truth . . makes any statement which is false and which he either knows or believes to be false or does not believe to be true, is said to give false evidence " the appellant was not legally bound by oath to state the truth cannot be supported.
On the other hand at the stage of the proceedings in the High Court where it was being alleged that Surjit Singh was being detained by the appellant illegally it was necessary for the appellant to make an affidavit in making a return and therefore if the statement is false, as it has been found to be, then he has committed an offence under section 193.
The opening words of section 191 whoever being legally bound by an oath or by an express provision of law to state the truth. . do not support the submission that a man, who is not bound under the law to make an affidavit, can, if he does make one, deliberately refrain from stating truthfully the facts which are within his knowledge,.
The meaning of these words is that whenever in a court of law a person binds himself on oath to state the truth he is bound to state the 733 truth and he cannot be heard to say that he should not have gone into the witness box or should not have made an affidavit and therefore the submission that any false statement which he had made after taking the oath is not covered by the words of section 191, India Penal Code, is not supportable.
Whenever a man makes a statement in court on oath he is bound to state the truth and if he does not, he makes himself liable under the provisions of section 193.
It is no defence to say that he was not bound to enter the witness box.
A defendant or even a plaintiff is not bound to go into the witness box but if either of them chooses to do so he cannot, after he has taken the oath to make a truthful statement, state anything which is false.
Indeed the very sanctity of the oath re quires that a person put on oath must state the truth.
In our opinion this contention is wholly devoid of force and must be repelled.
It was then contended that the officer before whom the appellant swore the affidavit, i. e., the Deputy Registrar of the High Court of PEPSU was not authorised to administer oaths.
That officer as a witness for the prosecution has stated that he could administer an oath and therefore this contention of the appellant is also without any force and must be repelled.
It was also argued that the affidavit filed by the appellant was affirmed as being true to the best of knowledge and belief and therefore it could not be said as to which part was true to the appellant 's knowledge and which to his belief.
We have read the affidavit which consists of 7 paragraphs and each paragraph relates to affirmation of a fact which, if true, could only be so to the appellant 's knowledge.
But even belief would fall under Explanation 2 to section 191 which is as under: Explanation 2 to section 191.
" A false statement as to the belief of the person attesting is within the meaning of this section, and a person may be guilty of giving false evidence by stating that he believes a thing which he does not believe, as well as by stating that he knows a thing which he does not know 734 The appellant relied upon a judgment of the Allahabad High Court in Emperor vs Lachmi Narain (1).
But unless there was something peculiar in the facts of that case it cannot be considered to be good law.
It does not even take into consideration Explanation 2 of section 191.
Lastly it was urged that the procedure adopted by the Magistrate was erroneous in that he did not hold an enquiry as required under sections 200 and 202, Criminal Procedure Code, the former of which is expressly mentioned in sub section 2 of section 476, Criminal Procedure Code.
That contention is equally untenable because under section 200, proviso (aa) it is not necessary for a Magistrate when a complaint is made by a court to examine the complainant and neither section 200 nor section 202 requires a preliminary enquiry before the Magistrate can assume jurisdiction to issue process against the person complained against.
In our opinion the appellant has been rightly convicted and we would therefore dismiss this appeal.
Appeal dismissed.
| A habeas corpus application was made to the High Court alleging that one S had been illegally arrested and kept in unlawful custody without any charge being made against him and without obtaining remand from a Magistrate.
By way of a return the appellant, a sub Inspector of Police, filed a false affidavit controverting the allegations made in the application.
He was prosecuted and convicted under section 193, Indian Penal Code.
The appellant challenged his conviction on the grounds that: (i) as he was not bound under the law to file an affidavit, the case did not fall under section 191 of the Indian Penal Code and he could not be convicted under section 193 ; and (ii) the affidavit having been affirmed as true to the best of the knowledge and belief of the appellant it could not be said which part was true to his knowledge and which to his belief.
Held that, the appellant was rightly convicted.
It was not necessary for the application of section 191 of the Indian Penal Code that the accused should be bound under the law to make an affidavit.
If he chose to me one and bound himself on oath to state the truth he was liable under section 193 Of the Code if e made a false statement and it was no defence to say that he was not bound to enter the witness box or make an affidavit.
In the present case it was necessary for the appellant to file an affidavit as he was bound to place the facts and circumstances justifying 728 the detention which could only be done by an affidavit.
Ordinarily, where the detention is under orders of the detaining authority in exercise of his plenary powers or of a Court an affidavit may not be necessary in making the return but where it becomes necessary for the detaining authority to justify its action by disclosing facts it has to file an affidavit.
Held, further, that explanation 2 to section 191 of the Code brings a false statement affirmed to the belief of the accused also within the mischief of section 191 and thus makes it punishable under section 193 of the Code.
Emperor vs Lachmi Narain, I. L. R. 1947 All.
155, dis approved.
|
Appeal No. 1705 of1969.
Appeal by special leave from the order dated February 21, 1959, of the Central Government Labour Court, Delhi in I.C.A. No. 2 of 1968 and Civil Appeal No. 1781 of 1969.
Appeal by special leave from the order dated February 24, 1969 of the Additional Industrial Tribunal, Delhi in I.D. No. 73 of 1968 and Appeal from the judgment and order dated February 21, 1969 of the Patna High Court in Civil Writ Jurisdiction Case No. 730 of 1968.
Niren De, Attorney General and section P. Nayar, for the appellant (in C. A. No. 1705 of 1969).
M. K. Ramamurthi, E. C. Agarwala, R. P. Agarwala and M. V. Goswami, for the respondent (in C. A. No. 1705 of 1969).
H. R. Gokhale, Jitendra Mahajan, for the appellant (in C.A. No. 1781 of 1969).
M. K. Ramamurthi, J. Ramamurthy and Madan Mohan, for the respondents (in C. A. No. 1781 of 1969).
H. R. Gokhale, M. C. Bhandare, for the intervener.
180 A. K. Sen, Ranen Roy and A. K. Nag, for theappellant (in C. A. No. 1777 of, 1969).
D. Goburdhun, for respondent No. 1 (in C. A. No. 1777 of 1969).
P. N. Tiwari and Shiva Pujan Singh, for respondent No. 3 (in C. A. No. 1777 of 1969).
The Judgment of the Court was delivered by Hidayatullah, C.J.
This judgment will dispose of Civil Appeals Nos. 1705 of 1969, 1781 of 1969 and 1777 of 1969.
The first is an appeal by the Management of Safdarjung Hospital, New Delhi.
The second by the Management of Tuber culosis Hospital, New Delhi and the third by the Kurji Holy Family Hospital, Patna.
The first two are filed by special leave and the third by certificate.
They call in question respectively the order of the Central Government Labour Court, Delhi dated 21st February, 1969 on an application under section 33C(2) of the Industrial Disputes Act, 1949, the order of the Presiding Officer, Additional Industrial Tribunal, Delhi dated 24th February, 1969 and the judgment and order dated 21st February, 1969 of the Patna High Court.
They raise a common question of law whether these several hospitals can be regarded as industries within the meaning of the term in the Industrial Disputes Act.
They also raise different questions on merits which will be considered separately.
The facts of the three cases may be noticed briefly before we begin to examine the common question of law mentioned above.
C.A. Nc. 1705 of 1969.
The Management of Safdarjung Hospital, New Delhi was the respondent in a petition under section 33C(2) of the in a petition by the present respondent Kuldip Singh Sethi, a Lower Division Clerk in the Hospital, for computation of the amount of salary etc.
due to him in the pay scale of store keepers.
Kuldip Singh Sethi was appointed as a Store keeper on October 26, 1956 in the pay scale of Rs. 60 5 75.
This scale was revised to Rs. 110 180 on July 1, 1959 in accordance with the ,recommendations of the Second Pay Commission.
Two or three months later the pay was re fixed and the time scale was Rs. 110 131 with usual allowances.
On July 1, 1962 his basic pay was fixed at Rs. 131.
On November 26, 1962 the Government of India in the Ministry of Health re revised the pay scales of Store keepers to Rs. 130 5 160 8 200 EB 8 280 10 300 with the usual allowances.
The order was to lake effect from the date of issue.
Kuldip Singh Sethi complained by his petition that the Management of the Hospital had failed to give him pay in this scale and claimed Rs. 914 for the period November 26, 1,962 to May 31, 1968.
181 In rely to his petition the Management contended that Kuldip p Singh Sethi was not a workman but a Government servant governed by the Conditions of Service for Government Servants and hence he could not invoke the since the Safdarjung Hospital was not an industry.
The Tribunal following the decision of this Court in State of Bombay vs Hospital Mazdoor Sabha(1) has held that the Hospital is an 'industry ', that Kuldip Singh Sethi is a 'workman ' and hence he is entitled to take recourse to section 3 3C (2) of the .
On merits his claim is found sustainable and he is given an award for Rs. 914.
We need not mention at this stage the grounds on which the merits of his claim are resisted.
The point of law that arises in the case is whether the Safdarjung Hospital can be properly described as an 'industry ' as defined in the .
C.A. No. 1781 of 1969.
In this case there is a dispute between the Management of the Tuberculosis Hospital, New Delhi and its workmen represented by the Aspatal Karamchari Panchayat regarding pay scales, and other facilities demanded by the workmen.
The Management has taken the preliminary objection that the does not apply since the Hospital is not an industry and is not run as such.
The Management.
, therefore, questions the reference to the Tribunal under section 10(1) (d) of the .
A preliminary issue is raised : "Is T.B. Hospital an industry or not?" In support of the case that the Hospital is not an industry, the Management emphasises the functions of the Hospital.
It is pointed out that the Hospital is run by the Tuberculosis Association of India as a research institute where training is given to Medical ,,graduates of the Delhi University for the D.T.C.D. and D.C.H. Courses, and postgraduates and undergraduates of the All India Institute of Medical Sciences are also provided training and nurses from the Delhi College of Nursing, Safdarjung, Lady Hardinge, and Holy Family Hospitals receive training.
The Hospital, it is admitted, has paid and unpaid beds but it is submitted that treatment of tuberculosis is a part of research and training and education, and, therefore, the Hospital has affinity to a University and, not to a Hospital proper.
It is, therefore, contended that this ,Hospital is not an industry.
The Tribunal holds that neither the research carried on, nor the training imparted, nor the existence .of the Tuberculosis Association of India with which the Hospital is affiliated makes any difference and the case falls within the ruling of this Court in the Hospital Mazdoor Sabha(1) case.
The (1) ; 182 Tribunal holds the Tuberculosis Hospital, New Delhi to be an industry.
C.A. No. 1777 of 1969.
The appeal arises from a writ petition filed in the High Court of Patna.
The Kurji Holy Family Hospital took disciplinary action against two of its employees and the matter was taken up by the Kurji Holy Family Hospital Employees Association and the State of Bihar made a reference to the Labour Court, Patna under section 10 of the .
Before the Tribunal, the Management of the Hospital took the objection inter alia that a hospital was neither a trade nor a business, nor an industry as defined in the and as such the provisions of the were not applicable and the reference was incompetent.
The High Court holds this point against the Management, following the Hospital Mazdoor Sabha(1) case.
The later case of this Court reported in Secretary, Madras Gymkhana Club Employees Union vs Management of the Gymkhana Club(2) is held not to have weakened the effect of the decision in the case relied upon.
It is thus that the three cases came before us and were heard together.
Counsel in these cases submit that the ruling in the HospitalMazdoor Sabha(1) case has now been considerably shaken by the pronouncement in the Madras Gymkhana Club (2) case where it was I observed that the Hospital Mazdoor Sabha( ') case was one which might be said to be on the verge and that there were reasons to think that it took an extreme view of an industry.
Relying on this observation, counsel in the three appeals asked for a reconsideration of the Hospital Mazdoor Sabha(1) case although they conceded that it was not yet overruled.
We accordingly heard arguments on the general question whether a hospital can be said to be an industry falling within the and under what circumstances.
We also heard arguments on the merits of the appeals to determine whether the decisions rendered therein could be upheld even if the Hospital Mazdoor Sabha(1) case was held applicable.
We shall follow the same course here.
We shall first consider the general proposition whether a hospital can be considered to fall within the concept of industry in the and whether all hospitals of whatever description can be covered by the concept or only some hospitals under special conditions.
We shall then consider the merits of the individual cases in so far as may be necessary.
The was construed in the past on more than one occasion by this Court.
A fairly comprehensive summary of the various cases with the rationes decidendi of those (1) ; (2) [1968] 1 S.C.R. 742.
183 cases is to be found in the Gymkhana Club(1) case.
, The tests applied to find out whether a particular establishment falls within the definition of 'industry ' or not were not found to be uniform and disclosed a pragmatic approach to the problem.
This Court, ,therefore, in Gymkhana Club(1) case fell back upon the statute for guidance pointing out that they were not concerned with a popular phrase but one which the statute, had with 'great particularity defined itself.
Examining the content of the definitions this Court came to certain conclusions and held in their light that a non proprietary members ' club was not an industry.
The reasoning in the Gymkhana Club(1) case formed the basis of an attack on the former ruling in the, Hospital Mazdoor Sabha(2) case by the Managements of the three Hospitals which are appellants here.
The other side relied.
upon the ruling and the amendment of the by which 'Service in hospitals and dispensaries ' has now been added as item No. 9 in the First Schedule, as one of the industries which may be declared to be public utility services under sub cl .
(vi) of cl.
(n) of section 2 of the Act.
It is claimed that this is a legislative determination of the question whether hospital is an industry or not.
It has, therefore, become necessary to cover some of the ground covered,in the Gymkhana Club(1) case.
To begin with we may once again refer to the relevant definitions contained in the Act for they must necessarily control our discussion.
The , as its title and indeed its whole tenor disclose, was passed to make provision for the investigation and settlement of industrial disputes and for certain other purposes appearing in the Act.
The term 'industrial dispute ' is defined by section 2(k) in the following words " 'industrial dispute ' means any dispute or difference between employers and employers or between employers and workmen, or between workmen and workmen, which is connected with the employment or non employment or the terms of employment or with the conditions of labour, of any person.
" The definition discloses that disputes of particular kinds alone are regarded as industrial disputes.
It may be noticed that this definition does not refer to an industry.
But the dispute, on the grammar of the expression itself, means a dispute in an industry and we must, therefore, turn to the definition of 'industry ' in the Act.
The word is defined in cl.
(j) and reads : " 'industry ' means any business, trade, undertaking, manufacture or calling of employers and includes any (1) [1968] 1 S.C.R. 742.
(2) ; 184 calling, services, employment, handicraft, or industrial occupation or avocation of workman.
" This definition is in two parts.
The first part says that it means any business, trade, undertaking, manufacture or calling of ,employers and then goes on to say that it includes any calling, service, employment handicraft or industrial occupation or avocation of workmen.
In dealing with this definition this Court in the Gymkhana ,Club case(1) attempted to keep the two notions concerning employers and employees apart and gave the opinion that the denotation of the term 'industry ' is to be found in the first part relating to ,employers and the full connotation of the term is intended to include the second part relating to workmen.
It was, therefore, concluded: "If the activity can be described as an industry with reference to the occupation of the employers, the ambit of the industry, under the force of the second part, takes in the different kinds of activity of the employees mentioned in the second part, But the second part standing alone cannot define 'industry. .
By the inclusive part of the definition the labour force employed in an industry is made an integral part of the industry for purposes of industrial disputes although industry is ordinarily something which employers create or undertake." These observations need to be somewhat qualified.
It is to be noticed that this definition modifies somewhat the definition, of "industry ' in section 4 of the Commonwealth Conciliation and Arbitration Act 1909 1970) (Acts Nos. 13 of 1904 and 7 of 1910) of Australia where the definition reads " 'industry ' means business, trade, manufacture, undertaking, calling, service or employment, on land or water, in which persons are employed for pay, hire, advantage or reward, excepting only persons engaged in agricultural, viticultural, horticultural, or dairying pursuits.
" Although the two definitions are worded differently the purport of both is the same.
It is not necessary to view our definition in two parts.
The definition read as a whole denotes a collective enterprise in which employers and employees are associated.
It does not exist either by employers alone or by employees alone.
It exists only when there is a relationship between employers and employees, the former engaged in business, trade, undertaking, manufacture or calling of employers and the latter engaged in any calling, service, (1) [1968] 1 S.C.R. 742.
185 employment, handicraft or industrial occupation or avocation.
There must, therefore, be an enterprise in which the employers follow their avocations as detailed in the definition and employ workmen who follow one of 'the avocations detailed for workmen.
The definition no doubt seeks to define 'industry ' with reference to employers ' occupation but includes the employees, for without the two there can be no industry.
An industry is only to be found when there are employers and employees, the former relying upon the services of the latter to fulfil their own occupations.
But every case of employment is not necessarily productive of an industry.
Domestic employment, administrative services of public officials, service in aid of occupations of professional men, also disclose relationship of employers and employees but they cannot be regarded as in the course of industry.
This follows from the definition of 'workman ' in the Act defined in cl.(s) which reads "workman ' means any person (including an ap prentice) employed in any industry to do any skilled or unskilled manual, supervisory, technical or clerical work for hire or reward, whether the terms of employment be express or implied, and for the purposes of any proceed ing under this Act in relation to an industrial dispute, includes any such person who has been dismissed, discharged or retrenched in connection with, or as a conse quence of, that dispute, or whose dismissal, discharge or retrenchment has led to that dispute, but does not include any such person (i) who is subject to the , or the or the Navy (Discipline) Act, 1934; or (ii) who is employed in the police service, or as an officer or other employee of a prison; or (iii) who is employed mainly in a managerial or administrative capacity; or (iv)who, being employed in a supervisory capacity,draws wages exceeding five hundred rupees per mensem or exercises, either by the nature of the duties attached to the office or by reason of the powers vested in him, functions mainly of a managerial nature.
" The word 'industry ' in this definition must take its colour from the definition and discloses that a workman is to be regarded as one employed in an industry if he is following one of the vocations mentioned in conjunction with his employers engaged in the vocations mentioned in relation to the employers.
Cl/70 13 186 Therefore an industry is to be found when the employers are carrying on any business, trade, undertaking, manufacture or calling of employers.
If they are not, there is no industry as such.
What is meant by these expressions was discussed in a large number of cases which have been considered elaborately in the Gymkhana Club(1) case.
The conclusion in that case may be stated : "Primarily, therefore, industrial disputes occur when the operation undertaken rests upon cooperation between employers and employees with a view to production and distribution of material goods, in other words, wealth, but they may arise also in cases where the co operation is to produce material services.
The normal cases are those in which the production or distribution is of material goods or wealth and they will fall within the expressions trade, business and manufacture.
" The words 'trade ', 'business ', 'manufacture ' and 'calling ' were next explained thus : "The word 'trade ' in this context bears the X X meaning which may be taken from Halsbury 's Laws of England, Third Edn.
38 p. 8 (a) exchange of goods for goods or goods for money; (b) any business carried on with a view to profit, whether manual, or mercantile, as distinguished from the liberal arts or learned professions and from agriculture; and business means an enterprise which is an occupation as distinguished from pleasure.
Manufacture is a kind of productive industry in which the making of articles or material (often on a large scale) is by physical labour or mechanical power.
Calling denotes the following of a profession or trade.
" It may be added here that in National Association of Local Government Officers vs Bolton Corporations(2) at page 183 et seq Lord Wright observes that 'trade ' is a term of the widest scope.
This is true.
We speak of the occupation of men in buying and selling, barter or commerce as trade.
We even speak of work, especially of skilled work as, trade, e.g. the trade of goldsmiths.
But the word as used in the statute must be distinguished from professions although even professions have 'trade unions '.
The word 'trade ' includes persons in a line of business in which persons are employed as workmen.
Business too is a word of wide import.
In one sense it includes all occupations and professions.
But in the collocation of the terms.
and their definitions these terms have a definite economic content of a particular type and on the (1) [1968] 1 S.C.R. 742.
(2) , 183.
187 authorities of this Court have been uniformly accepted as excluding professions and are only concerned with the production, distribution and consumption of wealth and the production and availability of material services.
Industry has thus been accepted to mean only trade and business, manufacture, or undertaking analogous to trade or business for the production of material goods or wealth and material services.
Why professions must be held outside the ambit of industry may be explained.
A profession ordinarily is an occupation requiring intellectual skill, often coupled with manual skill.
Thus a teacher uses purely intellectual skill while a painter uses both.
In any event, they are not engaged in an occupation in which employers and employees co operate in the production or sale of commodities or arrangement for their production or sale or distribution and their services cannot be described as material services.
What is meant by 'material services ' needs some explanation too.
Material services are not services which depend wholly or largely upon the contribution of professional knowledge, skill or dexterity for the production of a result.
Such services being given individually and by individuals are services no doubt but not material services.
Even an establishment where many such operate cannot be said to convert their professional services into material services.
Material services involve an activity carried on through co operation between employers and employees to provide the community with the use of something such as electric power, water, transportation, mail delivery, telephones and the like.
In providing these services there may be employment of trained men and even professional men, but the emphasis is not on what these men do but upon the productivity of a service organised as an industry and commercially valuable.
Thus the services of professional men involving benefit to individuals according to their needs, such as doctors, teachers, lawyers, solicitors etc. are easily distinguishable from an activity such as transport service.
The latter is of a commercial character in which something is brought into existence quite apart from the benefit to particular individuals.
It is the production of this something which is described as the production of material services.
Mr. Ramamurti arguing against the Hospitals drew our atten tion to Citrine 's book 'Trade Union Law ' (3rd edn.
p. 609) where the author observes : "However, whilst the words 'trade ' and 'industry ' are separately capable of a wide interpretation, when they occur in conjunction the tendency of the courts is to give them a narrow one.
" 188 He cites the House of Lords case to which we have referred and criticises the tendency of the court to narrow the meaning of the expressions 'industry ' and 'workman '.
He says that this narrow interpretation unnecessarily excludes from workmen 'teachers employed by local authorities, university employees, nurses and others employed under the National Health Service, the domestic staff of the Houses of Parliament and Civil Servants who are not employed in 'trading ' or 'industrial undertaking '.
He includes all these in the definitions because a person doing the same type of work for a commercial undertaking is within the definition.
According to him any person gainfully employed must be within the definition.
On the strength of this definition Mr. Ramamurthi also contends that not the Hospital Mazdoor Sabha(1) case but the earlier cases off this Court such as University of Delhi and Anr.
vs Ramnath(2) and National Union of Commercial Employees vs M. R. Meher(3) must be reconsidered and overruled.
The reason for these cases, as also the Gymkhana Club(4) case lies in the kind of establishment with which we are concerned.
The Gymkhana Club(4) case of this Court (followed and applied in Cricket Club vs Labour Union(5) has held that non profit making members ' clubs are not employed in trade or industry and their employees are not entitled to engage in trade disputes with the clubs.
This view finds support from Hotel and Catering Industry 'Training Board and Automobile Proprietary Ltd (6).
The Solicitors case cited by Mr. Ramamurti was so decided because there the services rendered by the employees were in aid of professional men and not productive of material goods or wealth or material services.
The other case of University was also decided, as it was, for the same reason.
It, therefore, follows that before an industrial dispute can be raised between employers and their employees or between employers and employers or between employees and employees in relation to the employment or non employment or the terms of employment or with the conditions of labour of any person, there must be first established a relationship of employers and employees associating together, the former following a trade, business, manufacture, undertaking or calling of employers in the production of material goods and material services and the latter following any calling, service, employment, handicraft, or industrial occupation or avocation of workmen in aid of the employers ' enterprise.
It is not necessary that there must be a profit motive but the enterprise must be analogous to trade or business in a commercial sense.
(1) ; (2) ; (3) [1962] Supp.
3 S.C.R. 157.
(4) [1968] 1 S.C.R. 742.
(5) A.I.R. (6) H.L. S.C.; and C.A. 189 We do not find it necessary to refer to the earlier cases of this Court from which these propositions have been deduced because they are all considered in the Gymkhana Club case(1).
We accept the conclusion in that case that : ". . before the work engaged in can be described as an industry, it must bear the definite character of 'trade. ' or 'business ' or 'manufacture ' or 'calling ' or must be capable of being described as an undertaking resulting in material goods or material services.
" We may now consider closely the Hospital Mazdoor Sabha(2) case and the reasons for which it was held that the workmen employed in a hospital were entitled to raise an industrial dispute.
We may say at once that if a hospital, nursing home or dispensary is run as a business in a commercial way there may be found elements of an industry there.
Then the hospital is more than a place where persons can get treated for their ailment.
It becomes a business.
In the Hospital Mazdoor Sabha(2) case, hospitals run by Gov ernment and even by a private association, not on commercial lines but on charitable lines or as part of the functions of Government Department of Health were held included in the definition of industry.
The reason given was that the second part of the definition of industry contained an extension of the first part by including other items of industry.
As we have pointed out the first and the second parts of the definition are not to be read in isolation as if they were different industries but only as aspects of the occupation of employers and employees in an industry.
They are two counterparts in one industry.
The case proceeds on the assumption that there need not be an economic activity since employment of capital and profit motive were considered unessential.
It is an erroneous assumption that an economic activity must be related to capital and profit making alone.
An economic activity can exist without the presence of both.
Having rejected the true test applied in other cases before, the test applied was 'can such activity be carried on by private individuals or group of indivi duals '? Holding that a hospital could be run as a business proposition and for profit, it was held that a hospital run by Government without profit must bear the same character.
With respect, we do not consider this to be the right test.
That test was employed to distinguish between the administrative functions of Government and local authorities and their functions analogous to business but it cannot be used in this context.
When it was emphasised in the same case that the activity must be analogous to business and trade and that it must be productive of goods or their distribution or for producing material services to the community at large (1) [1968] 1 S.C.R. 742.
(2) ; 190 or a part of it, there was no room for the other proposition that privately run hospitals may in certain circumstances be regarded as industries.
The expression 'satisfying material human needs ' was evolved which bore a different meaning.
These observations were apparently based on the observations of, Isaacs and Rich JJ.
in Federated Municipal and Shire Council Employees of Australia vs Melbourne Corporation(1), but they were : "Industrial disputes occur when, in relation to operations in which capital and labour are contributed in cooperation for the satisfaction of human wants and desires, those engaged in co operation dispute as to the basis to be observed, by the parties engaged, respecting either a share of the produce or any other terms and conditions of their co operation.
The question of profit making may be important from an income tax point of view, as in many municipal cases in England; but, from an industrial dispute point of view it cannot matter whether the expenditure is met by fares from passengers or from rates.
" The observations in the Australian case only indicate that in those activities in which government takes to industrial ventures, the notion of profit making and the absence of capital in the true sense of the word are irrelevant.
The passage itself shows that industrial disputes occur in operation in which employers and employees associate to provide what people want and desire in other words where there is production of material goods or material services.
In our judgment the Hospital Mazdoor Sabha (2) case took an extreme view of the matter which was not justified.
It is argued that after the amendment of the Industrial Dis putes Act by which 'service in hospitals and dispensaries ' is included in public utility services, there is no scope for saying that hospitals are not industries.
It is said that Parliament has accepted that the definition is suited to include a hospital.
This contention requires close attention in view of the fact that it was noticed in the Hospital Mazdoor Sabha(2) case although that arose before the amendment.
A public utility service is defined in the Act by merely naming certain services.
It will be noticed that these services are (i) any railway service or any transport service for the 'Carriage of passengers or goods by air; (1) ; (2) ; 191 (ii) any section of any industrial establishment on the working of which the safety of the establishment or the workmen employed therein depends; (iii) any postal, telegraph or telephone service; (iv) any industry which supplies power, light or water to the public; (v) any system of public conservancy or sanitation; After namingthese services the definition adds : (vi) any industry specified in the First Schedule which the appropriate Government may, if satisfied that public emergency or public interest so requires, by notification in the official gazette, declare to be a public uti lity service for the purposes of this Act, for such period as may be specified in the notification.
Provided that the period so specified shall not, in the first instance, exceed six months but may, by a like notification, be exceeded from time to time, by any period not exceeding six months, at any one time if in the opinion of the appropriate Government public emergency or public interest requires such extension.
The intention behind this provision is obviously to cassify certain services as public utility services with special protection for the continuance of those services.
The named services in the definition answer the test of an industry run on commercial lines to produce something which the community can use.
These are brought into existence in a commercial way and are analogous to business in which material goods are produced and distributed for consumption.
When Parliament added the sixth clause under which other services could be brought within the protection afforded by the Act to public utility services, it did not intend that the entire concept of industry in the Act, could be ignored and anything brought in.
Therefore it said that an industry could be declared to be a public utility service.
But what could be so declared had to be an industry in the first place.
We are concerned with the addition of item 9 'service in hospitals and dispensaries.
The heading of, the First Schedule speaks again of industries which may be de clared to be public utility services.
The original entries were five and they read: 1.
Transport (other than railways) for the carriage of passengers or goods, by land, water or air (now air is omitted).
Coal 192 3.
Cotton textiles.
Food stuffs 5.
Iron and steel.
It is obvious that general headings are given here.
Coal is not an industry but certain aspects of dealing with coal is an industry and that is what is intended.
That dealing must be in an industry in which there are employers and employees cooperating in the production of material goods or material services.
Similarly, cotton, textiles or food stuffs or iron and steel, as the entries stand, are not industries.
Therefore the heading of the First Schedule and the words of clause (vi) presuppose the existence of an industry which may be notified as a public utility service, for special protection under the Act.
Therefore when the list was expanded in the First Schedule and certain services were mentioned, the intention could not be otherwise.
The list was extended to 10 items by amendment of the Act by Act 36 of 1956 with effect from March 10, 1957.
The new items are (a) Banking, (b) Cement, (c) Defence Establishments, (d) Service in hospitals and dispensaries, and, (e) Fire Brigade Service.
Later by notifications issued under section 40 of the Act nine more items were added.
Section 40 gives to governments the power to add to the Schedule.
They are (a) Indian Government Mints, (b) India Security Press, (c) Copper Mining, (d) Lead Mining, (e) Zinc Mining, (f) Iron ore mining, (g) Service in any oil field, (h) Any service in, or in connection with, the working of any major port or dock and (i) Service in the Uranium Industry.
It is easy to see that most of them are items in which an industry proper involving trade, business, manufacture or something analogous to business can be found.
It is hardly to be thought that notifications can issue in respect of enterprises which are not industries to start with.
It is only industries which may be declared to be public utility services.
Therefore to apply the notification, the condition precedent of the existence of an industry has to be satisfied.
If there is an industry which falls within the items named in the First Schedule, then alone can it be notified to be classed as a public utility service.
The law does not work the other way round that every activity connected with coal becomes an industry and therefore on notification that activity becomes a public utility service.
The same is true of all items including all the services mentioned.
They must first be demonstrated to be industries and then the notification will apply, to them.
To hold otherwise would largely render useless all the definitions in the Act regarding industry, industrial disputes etc., in relation to the scheduled items.
Parliament has not attempted to declare that notwithstanding the definitions of 193 'industry ', 'industrial disputes, 'workman ' and 'employer ', every hospital is to be regarded as an industry.
All that has been provided is that an 'industry ' may be notified as a public utility service.
That is insufficient to convert non industries under the Act to industries.
We now take up the individual cases.
C.A. No. 1705 of 1969.
It is obvious that Safdarjung Hospital is not embarked on an economic activity which can be said to be analogous to trade or business.
There is no evidence that it is more than a place were persons can get treated.
This is a part of the functions of Government and the Hospital is run as a Department of Government.
It cannot, therefore, be said to be an industry.
In this case the petitioner chose to be a Lower Division Clerk.
The amount of security which he had to furnish in the job of a Store keeper was also refunded to him.
He had applied for the post on May 31, 1962.
On July 14, 1962 he again drew attention to his application.
His application was recommended on August 9, 1962.
It was only after November 26, 1962 when the scale of Store keepers was raised to Rs. 130 300 that he changed his views.
On December 12, 1962 he made a representation but in forwarding it the Medical Superintendent said that the incumbents of the posts of Store keepers could not be given the upgraded scale of Rs. 130 300.
In addition there were certain matters pending against him which precluded his appointment in that scale.
On August 11, 1966 the Director General wrote: "With reference to your letter No. 1 20/62 Estt., dated the 4th Jan, 1966 and subsequent reminder of even number dated the 24th May, 1966 on the subject noted above, I am directed to say that a reference was made to the Government of India in the Ministry of Health and Family Planning, New Delhi who have stated that it was not intended that the revised scale of Rs. 110 131 (previous scale of Rs. 60 75) should be further revised to Rs. 130 300 as all incumbents of the posts carrying the pay scale of Rs. 110 131 were promoted from Class IV and did not possess the requisite qualifications prescribed for posts, carrying pay scale of Rs. 130 300.
In view of the position stated above further action in the matter may kindly be taken in the light of the above remarks and storekeepers concerned informed accordingly.
In view of these facts it is hardly necessary to refer to the reports about the work of Kuldip Singh Sethi and other matters which 194 came in his way of promotion.
Both on the question of law decided by us and on the merits of his case, Kuldip Singh Sethi was not entitled to the pay scale of store keepers and the award of Rs. 914/ in his favour was wrong.
The appeal is allowed.
The order is set aside but there will be no order about costs.
C.A. No. 1781 of 1969.
The Tuberculosis Hospital is not an independent institution.
It is a part of the Tuberculosis Association of India.
The hospital is wholly charitable and is a research institute.
The dominant purpose of the Hospital is research and training, but as research and training cannot be given without beds.
in a hospital, the hospital is run.
Treatment is thus a part of research and training.
In these circumstances, the Tuberculosis Hospital cannot be described as an industry.
The order of the Additional Industrial Tribunal, Delhi on the preliminary point must be reversed.
The reference to the Tribunal under section 10(1)(d) of the was incompetent.
The appeal is allowed but we make no order about costs.
No. 1777 of 1969.
The objects of the Kurji Holy Family Hospital are entirely charitable.
It carries on work of training, research and treatment.
Its income is mostly from donations and distribution of surplus as profit is prohibited.
It is, therefore, clear that it is not an industry as laid down in the Act.
The reference made by the State Government, Bihar was thus incompetent.
The appeal will be allowed.
There will be no order about costs, except in the first case (C.A. 1705 of 1967) in which the earlier order of this Court shall be given effect to.
V.P.S. Appeals allowed.
| (1) The definition of industry in section 2(j) of the is in two parts.
But it must be read as a whole.
So read it denotes a collective enterprise in which employers and employees are associated.
It does not exist either by employers alone or by employees, alone.
It exists only when there is a relationship between employers and employees, the former engaged in business, trade, undertaking, manufacture or calling of employers and the latter engaged in any calling, service, employment handicraft or industrial occupation or avocation.
But every case of employment is not necessarily productive of an industry.
A workman is to be regarded as one employed in an industry only if he is following one of the vocations mentioned in conjunction with his employers engaged in the vocations mentioned in relation to the employers, namely, any business, trade, undertaking manufacture or calling of employers.
In the collocation of the terms and their definitions these terms have a definite economic content of a particular type and on the authorities of this Court have been uniformly accepted as excluding professions and are only concerned with the production, distribution and consumption of wealth and the production and availability of material services.
Industry has thus been accepted to mean only trade and business, manufacture, or undertaking analogous to trade or business for the production of material goods or wealth and material services.
Material services involve an activity carried on through co operation between employers and employees to provide the community with the use of something such as electric power, water, transportation, mail delivery, telephones and the like.
In providing these services there may be employment of trained men and even professional men, but the emphasis is not on what they do but upon the productivity of a service organised as an industry and commercially valuable, in which, something is brought into existence quite apart from the benefit to particular individuals; and it is the production of this something which is described as the production of material services.
Thus, the services of professional men involving benefit to individuals according to their needs, such as doctors, teachers, lawyers, solicitors, etc. are easily distinguishable from an activity such as transport service.
They are not engaged in an occu pation in which employers and employees cooperate in the production or sale of commodities or arrangement for the production or sale or distribution and their services cannot be described as material services and are outside the ambit of industry.
It, therefore, follows that before an industrial dispute can be raised between employers and employers or between employers and employees or between employees and employees in relation to the employment or non employment or the terms of employment or with the conditions of labour of any person, there must first 178 be established a relationship of employers and employees associating together, the former following a trade, business, manufacture, undertaking or calling of employers in the production of material goods and material services and the attack following any calling, service, employment, handicraft or industrial occupation or avocation of workmen in aid of the employers enterprise.
It is not necessary that there must be profit motive, but the enterprise must be analogous to trade or business in a commercial sense.
[183 H; 184 G H; 185 C, H; 186 H; 187 A B, E G; 188 F H] (2) The decision in State of Bombay vs Hospital Mazdoor Sabha, ; holding that a Government hospital was an industry took an extreme view of the matter and cannot be justified, because : (a) it was erroneously held that the second part of the definition of 'industry ' was an extension of the first part, whereas, they are only the two aspects of the occupation of employers and employees in an industry; (b) it was assumed that economic activity is always related to capital or profit making and since an enterprise could be an industry without capital or profit making it was held that even economic activity was not necessary; and (c) it was held that since a hospital could be run as a business proposition and for profit by private individuals or groups of individuals a hospital run by Government without profit must also bear the same character.
This test was wrongly evolved from the observations in Federated Municipal and Shire Council Employees of Australia vs Melbourne Corporation, ; , which only indicate that in those activities in which Government take to industrial ventures the motive of profit making and absence of capital are irrelevant.
The observations, on the contrary, show that industrial disputes occur only in operations in which employers and employees associate to provide what people want and desire, that is, in the production of material goods or services, and not the 'satisfaction of material human needs '.
If however a hospital, nursing home or dispensary is run as a business, in a commercial way there may be found elements of an industry there.
Then the hospital is more than a place where persons can get treated for their ailments and it becomes a business.
[189 D H; 190 E F] Hospital Case ; over ruled.
(3) Under section 2(n)(vi) any industry specified in the First Schedule to the Act could be notified by the appropriate Government as a public utility service.
But what could be declared had to be an industry in the first place.
The original entries in the Schedule were five and obviously only general headings were given.
For example 'coal ' is not an industry but certain aspects of dealing with coal would be 'industry ' and that is what is intended.
The dealing must be an industry in which.
there arc employers and employees cooperating in the production of material goods for material services.
Similarly, cotton, textiles or food stuffs or iron and steel, as the entries stand, are not industries.
Therefore, the heading of the First Schedule and the words of cl.
(vi) presuppose the existence of an industry which may be notified as a public utility service, for special protection under the Act.
[191 F H] When the list was expanded in the First Schedule and certain services were mentioned, the intention could not have been otherwise.
It could not have been intended by Parliament that the entire concept of 'industry ' in the Act could be ignored and anything could be brought in as industry.
Most of the new entries are items in which an industry proper involving trade, business.
manufacture or something analogous to business can be found% Therefore, to apply the notification.
the condition precedent of the existence of an industry has to be satisfied.
If there is an industry 179 which falls within the item named in the first Schedule, then alone can it be notified to be classed as a public utility service.
To hold otherwise would largely render useless all the definitions in the Act regarding industry, industrial disputes etc., in relation to the scheduled items.
It is hardly to be thought that notifications can issue in respect of enterprises which are not 'industry ' to start with.
Parliament could not have attempted to declare that notwithstanding the definitions of 'industry ', 'industrial dispute ', workman ' and 'employer ' every hospital is to be regarded as an industry, by including 'service in hospitals and dispensaries ' in the First Schedule.
[192 B C, F H] (4) The activities in the cases of Secretary Madras Gytmkhana Club Employees Union vs Management of the Gymkhana Club [1968] 1 S.C.R. 742, University of Delhi vs Ramnath, ; and National Union of Commercial Employees vs M. R. Meher, [1962] Supp. 3 S.C.R. 157 were rightly held not be industries, because, in the first the management was a non profit making members ' club not employed in trade or industry, and the other two were cases in which the services rendered by the employees were in aid of professional men and not productive of material wealth or services.
[188 C F] Hotel and Catering Industry Training Board and Automobile Proprietary Ltd. H.L.; S.C.; and [1968]3 All.
E.R. 399 C.A., referred to.
Therefore, the Safdarjung Hospital which is run as a department of the Government, the Tuberculosis Hospital which is a charitable and research institute.
and the Kurji Holi Family Hospital which is entirely charitable, are not industries within the meaning of the .
[193 C; 194 B E]
|
Appeals Nos. 10 and 10 A of 1952.
Appeal from the Judgment and Order dated 11th January, 1950, of the High Court of Judicature at Madras in Cases Referred Nos. 80 of 1946 and 38 of 1948.
M. C. Setalvad, Attorney General for India, (G. N. Joshi and P. A. Mehta, with him) for the appellant.
section Krishnamachariar for the respondent.
465 1952.
December22.
The Judgment of the Court was delivered by DAS J.
These two consolidated appeals are directed against the Judgment and order made on January 11, 1950) by the High Court of Judicature at Madras in References No. 80 of 1946 and No. 38 of 1948 under section 66 of the Indian Income tax Act whereby the High Court relying on its earlier decision in Commissioner of Income tax, Madras vs B. Rm.
M. Sm.
Sevugan alias Manickavasagam Chettiar(1) held that the references were incompetent and accordingly refused to answer the questions raised therein.
The facts are shortly as follows.
The respondent who is a Nattukotai Chettiar had, his headquarters at Karaikudi in India and also carried on his money lending business at branches at Maubin, Kualalumpur and Singapore.
He also had income from properties at Maubin and Singapore.
For the assessment year 1941 42 the Income tax Officer calculated the assessee 's accrued foreign income as Rs. 29,403 at Maubin, Rs. 27,731 at Kualalumpur and Rs. 34,584 at Singapore, in all Rs. 91,718.
After deducting out of this amount Rs. 4,500 allowed under the 3rd proviso to section 4 (1) of the Act, the Income tax Officer computed the total assessable foreign income at Rs. 87,218.
Out of the total remittances of Rs. 84,352 the Income tax Officer allocated Rs. 7,900 to the accrued income of Maubin and Rs. 62,315 to those of Kualalumpur and Singapore and the balance of Rs. 14,137 to the taxed income of earlier years.
The Income tax Officer disallowed the claim of the assessee to deductions under several heads.
On the basis of the total foreign income of Rs. 67,218 and income from ' other sources the Incometax Officer calculated Rs. 23,266 8 0 to be due by the assessee on account of income tax, super tax and surcharges thereon and by his assessment order dated January 31, 1942, made this amount payable on or before February 25, 1942.
The assessee preferred an (1) [1948] 16 I.T.R. 59; ; A.I.R. 1948 Mad, 418 466 appeal to the Appellate Assistant Commsioner against the disallowance of the several items of his claim including the claim for replantation expenses amounting to$498incurred at Kualalumpur and a bad debt of $ 15,472 at Singapore.
The Appellate Assistant Commissioner by his order dated May 25, 1942, allowed some of the several objections but disallowed the items of replantation expenses and ba` debt and reduced the assessment to Rs. 22,548.
The assessee took further appeal before the appellate Tribunal against the disallowance of the several claims by the Appellate Assistant Commissioner including the two items mentioned above.
The Appellate Tribunal by its order dated August 20, 1943, held that the replantation expenses "will be allowed to the appellant as expenses.
" As regards the bad debt the Tribunal held that it was permissible and that "the deduction claimed will, therefore, be allowed.
" The result was that the appeal was partly allowed.
The matter came back before the Income tax Officer on September 26, 1945.
Deducting Rs. 778 on account of replantation expenses the Kualalumpur income was reduced to Rs. 26,953 and after deducting Rs. 24,175 on account of the bad debt the Singapore income came down to Rs. 10,409.
These two reduced amounts together with Rs. 29,403 being the income 'from Maubin made up the total accrued income of Rs. 66,765.
Out of this amount Rs. 4,500 was deducted on account of unremitted profits of Maubin under the 3rd proviso to section 4(1) of the Act, leaving a balance of Rs. 62,265.
Out of the remittances the Income tax Officer allocated Rs. 7,000 towards the accrued income of Rs. 29,403 from Maubin and Rs. 37,362 against the totarl accrued income of Kualalumpur and Singapore.
He also allocated Rs. 24,549 as remittances out of assessed profits of previous years, leaving a balance of Rs. 13,541.
This amount the Income tax Officer considered as remittances out of earlier years ' unassessed income and held it to be asses. able to tax.
After adding Rs. 13,541 to Rs. 62,265 being the net accrued income of the year 467 from Maubin, Kualalumpur and Singapore, the Income tax Officer arrived at the total foreign income of Rs. 75,806.
On the basis of this foreign income together with other income the Income tax Officer.
recalculated the amount of income tax, super tax and surcharges thereon at Rs. 22,802 6 0 and after giving credit for certain amounts, found Rs. 21,211 14 0 as the balance due which by his order dated September 26, 1945, was made payable in equal moiety on or before September 30, 1947, and March 31, 1948.
He, however, did not issue any notice of demand under section 29 of the Act.
Being aggrieved by the inclusion of Rs. 13,541 as the alleged unassessed foreign income of earlier years remitted to India during the year of account the assessee preferred an appeal before the Appellate Assistant Commissioner.
The Appellate Assistant Commissioner was not satisfied that the assessee had any right of appeal under section 30 of the Act for there had been no assessment under section 23 and no notice of demand had been served on the assessee under section 29 of the Act.
Accordingly the Appellate Assistant Commissioner by his order dated November 19, 1945, declined to admit the appeal.
He, however, expressed the view that the assessee 's remedy might lie in a miscellaneous application to the Tribunal complaining that the Income tax Officer had either misconstrued or had not given effect to the order of the Appellate Tribunal.
The assessee then brought a miscellaneous application to the Appellate Tribunal.
The Appellate Tribunal held that the.
finding of the Income tax Officer that the sum of Rs. 13,541 was to be assessed as untaxed profits of earlier years remitted to India in the accounting year did not arise in the course of giving effect to the Appellate Tribunal 's order and by its order dated February 20, 1946, cancelled that finding and directed the Income tax Officer to revise the computation accordingly.
The last mentioned order having been served on the Commissioner of Income tax, Madras, on March 8, 468 1946, the latter on May 1, 1946, made an application before the Appellate Tribunal under section 66(1) of the Act and prayed that three questions formulated by him in his petition should be referred to the High court.
The contention was that the Appellate Tribunal had no jurisdiction in law to entertain, consider and pass the order which it did on the miscellaneous application seeing that it was neither an appeal under section 33 of the Income tax Act nor could it be regarded as a rectification under section 35 of any mistake committed by the Bench.
The Appellate Tribunal took the view that although no specific provision was made in the Act by which it could give effect to its order or explain any ambiguity in such an order by a later order in any miscellaneous application filed by any party, such power, nevertheless ', was inherent in" the Tribunal.
The Tribunal accordingly thought that a point of law did arise and on August 23, 1946, referred the following question to the High Court, namely: "Whether in the facts and circumstances of this case the order of the Bench dated 20th February, 1946, in the miscellaneous application is an appropriate order and is legally valid and passed within the jurisdiction and binding on the Income tax Officer.
" The Tribunal declined to refer the other questions formulated by the Commissioner.
This reference came to be numbered as Case Referred No. 80 of 1946.
It appears that pursuant to an order made by the High Court on March 30,1948, on the application of the Commissioner of Income tax under section 66 (2) of the Act the Tribunal referred the following question to the High Court: " If the answer to the question already referred to the High Court by the order of the Appellate Tribunal dated 23rd August, 1946, is in the affirmative,, whether, in the circumstances and on the facts of the case, the recomputation made by the Income tax Officer pursuant to the decision of the Appellate 469 Tribunal in R.A.A. No. 53 (Madras) of 1942 43 was valid and correct." The Appellate Tribunal made this further reference on July 19, 1948, which came to be numbered as Case Referred No. 38 of 1948.
The two referred cases came up for consideration before a Bench of the Madras High Court and it was held that the reference under section 66(1) was incompetent in view of the earlier decision of that Court mentioned above which they felt to be binding on them and accordingly the Bench declined to answer the questions.
The Commissioner of Incometax thereafter applied for and obtained leave to appeal to this Court from the decisions in both the references and obtained such leave on his undertaking to pay the costs of the assessee in any event.
The two appeals were thereafter consolidated and have come up before us for final disposal.
Section 66 A (2) gives to the aggrieved party a right of appeal to this Court from any judgment of the High Court delivered on a reference made under section 66 in any case which the High Court certifies to be a fit one for appeal to this Court.
Section 66, (5) provides that the High Court upon the hearing of any such case referred to it under section 66(1) and (2) shall decide the questions of law raised thereby and shall deliver its judgment thereon containing the grounds on which such decision is founded.
During the opening of the case by the learned Attorney General a question arose as to whether the simple refusal of the High Court to bear the case on the ground that the reference was incompetent was a decision and judgment such as is contemplated by section 66(5) of the Act from which alone a right of appeal to this Court is given.
While maintaining that the decision and judgment of the Madras High Court fell within the meaning of section 66(5) the learned Attorney General for greater safety asked that the appeal may be treated as one on special leave granted by this Court under article 136 of the Constitution.
The learned Advocate appearing for the 470 assessee respondent did not object to this prayer and accordingly we gave leave to the appellant under article 136 and treated this appeal as one filed pursuant to such leave.
In the circumstances it is not necessary for us to express any opinion on the appealability of the order of the High Court under section 66 A of the Act.
The learned Attorney General contends that the decision relied on by the High Court has no application to the facts of the present case.
In that case the Tribunal by its order dated July 11, 1944, allowed an appeal from the Appellate Assistant Commissioner and cancelled the assessment which it held to be illegal.
This order was served on the Commissioner shortly thereafter.
On October 5, 1944, an application was made to the Tribunal by the Income tax Officer under section 35 to correct a statement contained in the statement of facts in the order.
More than 60 days after the date of the service on him of the order of July 11, 1944, to wit on October 7, 1944, the Commissioner made an application under section 66 (1) of the Act requiring the Tribunal to refer to the High Court the question as to the correctness of its decision embodied in the order of July 11, 1944.
Both the applications were disposed of on the same day, namely, January 17, 1945, when the application for rectification was granted and a case was stated for the opinion of the Court as prayed.
Section 66 (1) requires the application to be made within 60 days of the date on which the applicant is served with notice of an order under sub section (4) of section 33.
It was held that the granting of an application for rectification under section 35 and correcting the error in the order was not an order under section 33 (4) and, therefore, was not one in respect of which section 66 (1) permitted a case to be stated.
It was further held that if the Appellate Tribunal improperly or incorrectly made a reference in violation of the provisions of the statute, the High Court was capable of entertaining an objection to the statement of the case and that, if it camp to the 471 conclusion that the case should not have been stated, the High Court was not compelled to express an opinion upon the question referred.
in the case before us there is no question that the present application was not made within time, but the contention is that section 66 (1) only contemplates an application for a reference of a question of law arising out of " such order" which clearly means an order made under section 33 (4), _and, therefore, if there is no valid order under that section no question of law can be said to arise out of "such order" and consequently the Appellate Tribunal can have on jurisdiction to make any reference to the High Court under section 66(1).
Section 66 (2) provides that if on any application being made under sub section (1) the Appellate Tribunal refuses to state the case on the ground that no question of law arises, the assessee or the Commissioner may, within the time specified therein, apply to the High Court and the High Court may, if it is not satisfied of the correctness of the decision of the Appellate Tribunal, require the Appellate Tribunal to state the case and to refer it.
The jurisdiction given to the High Court under this sub section is conditional on an application under sub section (1) being refused by the Appellate Tribunal.
This clearly presupposes that the application under sub section (1) was otherwise a valid application.
If, therefore, an application under sub section (1) was not well founded in that there was no order which could properly be said to be an order under sub section (4) of section 33 then the refusal of the Appellate Tribunal to state a case on such misconceived application on the ground that no question of law arises will not authorise the High Court, on an application under sub section (2) of section 66, to direct the Tribunal to state a case.
The jurisdiction of the Tribunal and of the High Court is conditional on there being an order by the Appellate Tribunal which may be said to be one under section 33 (4) and a question of law arising out of such an order.
The only question for our consideration, therefore, is whether in this case any question 472 of law arose out of an order which can properly be said to have been made by the Appellate Tribunal under sub section (4) of section 33, for if it did not, then the Appellate Tribunal would have no jurisdiction under sub section (1) of section 66 to refer a case, nor would the High Court have jurisdiction under sub section (2) of that section to direct the Tribunal to do so.
It was at one stage suggested by the learned AttorneyGeneral that we should in the first instance remit the matter to the High Court for their decision on this question but as the question is one of law depending on the construction of the relevant sections of the Act it will save time if it is decided by us here and now.
It is not disputed that we have the power, on the hearing of this appeal, to decide this question.
It will be recalled that when on 19th November, 1945, the Appellate Assistant Commissioner declined to admit the appeal, the assessee did not prefer any appeal but only made a miscellaneous application before the Appellate Tribunal.
There is no provision in the Act permitting such an application.
Indeed, in the statement of the case the Appellate Tribunal states that in entertaining that application and correcting theerror of the Income tax Officer it acted in exercise ofwhat it regarded as its inherent powers.
There being no appeal under section 33 (1) and the order having been made in exercise of its supposed inherent jurisdiction.
, the order cannot possibly be regarded as one under section 33 (4) and there being no order under section 33 (4) there could be no reference under section 66 (1) or (2) and the appellate Court properly refused to entertain it.
The learned Attorney General submits that this Court should not take such a narrow and technical view but should treat that miscellaneous application as really an appeal under section 33.
Turning now to section 33 we find that any assessee objecting to an order passed by an Appellate Assistant Commissioner under section 28 or section 31 may appeal to the Appellate Tribunal within the time specified in 478 sub section (1) which time, however, may be extended by the Tribunal under sub section (2A).
Under sub section (4) the Appellate Tribunal is given power, after giving both parties to.
the appeal an opportunity to be heard, to pass such order thereon as it thinks fit.
It is thus clear that the Appellate Tribunal can make an order under section 33 (4) only on an appeal from an order passed by the Appellate Assistant Commissioner under section 28 or section 31.
If, therefore, there is no order which may properly be said to have been made by the Appellate Assistant Commissioner under section 28 or section 31 then there can be no appeal under section 33 (1) and consequently there can be no order under section 33 (4).
Section 28 is not relevant for our present purpose.
Section 30 provides for filing of appeals against assessments made under the Act.
Sub section (1) of that section prescribes the different decisions against which an appeal will lie.
Sub section (2) prescribes the time within which the appeal is to be filed.
Subsection (3) prescribes the form in which the appeal is to be made.
Then comes section 31 which gives power to the Appellate Assistant Commissioner to hear and dispose of such appeal.
Sub section (3) of section 31 empowers the Appellate Assistant Commissioner in disposing of an appeal under section 30 to make one or other order under one or other of the several clauses of that ' sub section.
It is, therefore, clear that in order that the Appellate Assistant Commissioner may exercise his jurisdiction and make an order under section 3 1, there must be an appeal as contemplated by section 30.
The learned AttorneyGeneral only relies on the opening part of sub section (1) of section 30 and contends that the appeal before the Appellate Assistant Commissioner was with respect to the amount of income assessed under section 23 or section 27.
It will be recalled that the Appellate Tribunal held that the two sums claimed by the assessee would be allowed to him and concluded by saying that the appeal was partly allowed.
The power of the Appellate Tribunal under section 33(4) 474 is indeed wide, for on an appeal properly before it, it can make such order as it thinks fit.
Therefore, it be order made by the Appellate Tribunal in this case on August 20, 1943, must be read and construed as a direction to the Income tax Officer to carry out the directions by allowing the two deductions in question.
When the matter again came before the Income tax Officer his function was only to carry out the order of the Appellate Tribunal.
He could not otherwise reopen the assessment already made by him under section 23.
Therefore, in carrying out the directions of the Tribunal and in doing what be aid on September 26, 1945, the Income tax Officer cannot be regarded as having acted under section 23 or section 27 of the Act and that being the position no appeal lay from that order of the Income tax Officer under section 30 (1) of the Act, I The result of it was that there was no proper appeal before the Appellate Assistant Commissioner such as is contemplated by section 30 (1) and, therefore, the order made by the Appellate Assistant Commissioner cannot be regarded as an order made by him under section 31 (3), for an order under section 31 (3) can only be made in disposing of an appeal properly ' filed under section 30, and consequently no further appeal lay to the Appellate Tribunal under section, 33 (1) so as to enable the Appellate Tribunal to make an order under sub section (4) of that section.
In the premises, there being no order which may properly be said to have been made under section 33 (4), no question of law can be said to arise out of an order made under section 33 (4) and consequently there can be no valid reference under section 66, subsection (1) or sub section (2).
If, therefore, the reference was incompetent for want of jurisdiction both under section 66 (1) or section 66 (2) surely the High Court could decline to entertain it as it did.
Even if the order dated September 26, 1945, made by the Income tax Officer after the matter came back to him to give effect to the decisions of the Appellate Tribunal be regarded as an order made by him under 475 section 23 or section 27 and as such appealable under section 30 (1) then the order made by the Appellate Assistant Commissioner on November 19, 1946, declining to admit the appeal clearly amounted to a refusal on his part to exercise the jurisdiction vested in him by law.
An order thus founded on an error as to his jurisdiction way conceivably be corrected by appropriate proceedings but it cannot certainly be regarded as such an order as is contem plated by any of the sub sections of section 31.
Such an order not coming within the purview of section 28 or section 31, no, appeal lay therefrom to the Appellate Tribunal under section 33 (1) and if no such appeal properly came before the Appellate Tribunal it could not properly make an order under section 33 (4) and if there was no order under section 33 (4) there could be no reference under section 66, sub section (1) or sub section (2).
It follows, therefore, that the order of the Appellate Tribunal correcting the order of the Income tax Officer directing that the sum of Rs. 13,541 should not be included in the assessment cannot be regarded as an order passed by the Appellate Tribunal under section 33 (4) so as to attract the operation of section 66.
The learned Attorney General urged that having under section 66 (2) of the Act directed the Appellate Tribunal to state a case the High Court could not afterwards refuse to answer the question thus referred to it.
Whether the High Court was so precluded or not requires no decision on this occa sion, for even conceding but ;not deciding that the High Court was so precluded, this Court, at any rate, can surely entertain the question of the competency of the reference.
The result, therefore, is that we dismiss these appeals with costs.
Appeals dismissed.
| By an order dated August 20, 1943, the Appellate Tribunal directed that certain deductions claimed by the assessee should be allowed.
The matter came back to the Income tax Officer and he made an order on September 26, 1945, but did not issue any fresh notice of demand.
The assessee appealed to the Appellate Assistant Commissioner complaining that in his order of September 26, the Income tax Officer had wrongly included a sum of Rs. 13,000 60 464 as unassessed foreign income of earlier years.
The Appellate Assistant Commissioner held that the order of September 26 was not appealable.
The assessee, therefore, made a miscellaneous application to the Appellate Tribunal, which held that the Incometax Officer acted wrongly in including the sum of Rs. 13,000 at that stage and directed the Income tax Officer to revise his computation accordingly.
The Commissioner of Income tax, being of opinion that the Appellate Tribunal had no jurisdiction to entertain or make such order on a miscellaneous application applied for a reference to the High Court under section 66 (1) of the Income tax Act.
The Tribunal referred certain questions and the High Court directed the Tribunal to refer certain other questions also but when the references came on for bearing the High Court held that the references were incompetent.
The Commissioner of Incometax appealed to the Supreme Court with the leave of the High Court : Held, (i) that in carrying out the directions of the Tribunal and in passing the order of September 26, 1945, the Income tax Officer cannot be regarded as having acted under section 23 or section 27 of the Act and no appeal lay from his order under section 30 (1).
The order made by the Appellate Assistant Commissioner was not therefore an order under a. 31 (3) and no further appeal lay to the Appellate Tribunal under section 33 (1) so as to enable the Tribunal to make an order under section 33 (4) and us there was no order under a. 33 (4), no question of law can be said to arise out of an order under section 33 (4) and there can be no valid reference under section 66 (1) or section 66 (2); (ii) even assuming that the order of the Income tax Officer dated September 26, 1945, was an order under a. 23 or section 27 and as such appealable, the order made by the Appellate Assistant Commissioner declining to entertain the appeal was not an order under any of the sub sections of a. 31 and no appeal lay therefrom to the Appellate Tribunal under section 33 (1) and there could be no order of the Appellate Tribunal under section 34 (1).
The order of the Appellate Tribunal correcting the order of the Income tax Officer and directing that the sum of Rs. 13,541 should not be included cannot be regarded in any event as an order under section 33 (4) so as to attract the operation of section 66 (1) or (2).
|
Civil Appeal No. 653 of 1991.
284 From the Judgment and Order dated 11.
12.1989 of the Central Administrative Tribunal, Chandigarh in O.A. No. 694 of 1988.
Avadh Behari, A.K. Sharma and Inderjit Singh Mehra for the Appellants.
Dr. Anand Prakash, B. Krishna Prasad and S.M. Ashri for the Respondent.
The Judgment of the Court was delivered by SINGH, J.
Leave granted.
Whether family pension payable under the service rules could be bequeathed by means of a will by the deceased employee during his life time, is the question involved in this appeal.
Briefly, the facts giving rise to this appeal are that, Issac Alfred was employed in the Railway Workshop, Jagadhri as a Skilled Mechanic, Tool Shop, he died in harness on 16.10.1984.
On his death a dispute arose between Mrs. Violet Issac, widow of the deceased Railway employee, his sons, daughters and Elic Alfred, brother of the deceased regarding family pension, gratuity and other emoluments, payable by the Railway Administration.
Violet Issac, widow of the deceased employee made an application before the competent Railway Authority for the grant of family pension and for payment of gratuity and other dues to her, her four sons and one daughter, who are appellant Nos. 2 to 6.
The Railway Authorities did not pay any amount to the appellants as an injunction order had been issued by the Sub Judge, 1st Class, Jagadhri in Civil Suit No. 365/85 filed by Elic Alfred, brother of the deceased employee, restraining the appellants from claiming or receiving any amount which were to the credit of the deceased Railway employee towards C.T.D. Account, gratuity, family pension and other dues.
It appears that the relations between late Issac Alfred and his widow Smt.
Violet Issac and the children were not cordial, as a result of which he had made nomination in favour of his brother and further he had executed a will dated 9.9.1984 in favour of Elic Alfred bequeathing all his properties to him including the family pension, gratuity etc.
When the appellants raised claim for family pension and other dues before the Railway Authorities, Elic Alfred filed Civil Suit No. 365/85 for the issue of a permanent injunction restraining the appellants from receiving or claiming any monetary benefits from the Railway Administration.
In his suit Elic Alfred had 285 pleaded that in view of the will, his deceased brother 's widow and children were not entitled to any benefit from the Railway Authorities, instead he was entitled to the deceased 's estate including the right to receive family pension and other dues.
The Civil Court issued an injunction order restraining the appellants from receiving any amount from the Railway Authorities as a result of which the Railway Administration did not pay any amount to them.
The appellants, thereupon, made an application before the Central Administrative Tribunal, Chandigarh for the issue of a direction for the release of the amounts on account of gratuity, group insurance, provident fund, CTD account, and family pension.
The appellants pleaded that the will relied upon by Elic Alfred was a forged one and Elic Alfred was not entitled to receive pensionary benefits.
On an application made by the appellants the suit pending before the Civil Court was also transferred to the Tribunal 's file.
The Tribunal by its order dated 11.
12.1989 held that since the dispute related to rival claims based on title arising from relationship in one case and from a will in the other, it has no jurisdiction to decide the same.
The Tribunal further directed for the transfer of the civil suit to the Civil Court for trial in accordance with law.
The appellants have challenged the order of the Tribunal by means of the present appeal.
The dispute between the parties relates to gratuity, provident fund, family pension and other allowances, but this Court while issuing notice to the respondents confined the dispute only to family pension.
We would therefore deal with the question of family pension only.
Family Pension Rules 1964 provide for the sanction of family pension to the survivors of a Railway Employee.
Rule 801 provides that family pension shall be granted to the widow/widower and where there is no widow/widower to the minor children of a Railway servant who may have died while in service.
Under the Rules son of the deceased is entitled to family pension until he attains the age of 25 years, an unmarried daughter is also entitled to family pension till she attains the age of 25 years or gets married, which ever is earlier.
The Rules do not provide for payment of family pension, to brother or any other family member or relation of the deceased Railway employee.
The Family Pension Scheme under the Rules is designed to provide relief to the widow and children by way of compensation for the untimely death of the deceased employee.
The Rules do not provide for any nomination with regard to family pension, instead the Rules designate the persons who are entitled to receive the family pension.
Thus, no other person except those designated under the Rules are entitled to receive family pension.
The Family Pension Scheme confers monetary benefit on the 286 'wife and children of the deceased Railway employee, but the employee has no title to it.
The employee has no control over the family pension as he is not required to make any contribution to it.
The Family Pension Scheme is in the nature of a welfare scheme framed by the Railway Administration to provide relief to the widow and minor children of the deceased employee.
Since, the Rules do not provide for nomination of any person by the deceased employee during his life time for the payment of family pension, he has no title to the same.
Therefore, it does not form part of his estate enabling him to dispose of the same by testamentary disposition.
In Jodh Singh vs Union of India & Anr., [ ; this Court on an elaborate discussion held that family pension is admissible on account of the status of a widow and not on account of the fact that there was some estate of the deceased which devolved on his death to the widow.
The Court observed: "Where a certain benefit is admissible on account of status and a status that is acquired on the happening of certain event, namely, on becoming a widow on the death of the husband, such pension by no stretch of imagination could ever form part of the estate of the deceased.
If it did not form part of the estate of the deceased it could never be the subject matter of testamentary disposition.
The Court further held that what was not payable during the life time of the deceased over which he had no power of disposition could not form part of his estate.
Since the qualifying event occurs on the death of the deceased for the payment of family pension, monetary benefit of family pension cannot form part of the estate of the deceased entitling him to dispose of the same by testamentary disposition.
We, accordingly hold that Mrs. Violet Issac the widow of the deceased Railway employee is entitled to receive the family pension, notwithstanding, the will alleged to have been executed by the deceased on 9.9.1984 in favour of his brother Elic Alfred.
As regards appellant Nos. 2 to 6 are concerned, it has been stated on behalf of the Railway Administration that they are not minors, therefore, under the Rules they are not entitled to any family pension.
We, accordingly allow the appeal, set aside the order of the Tribunal and direct the respondent Railway Adminstration to sanction family pension in accordance with the Rules to the appellant No. 1 and to pay the arrears within two months.
The respondent 's suit, so far as it relates to the 287 family pension cannot proceed but we do not express any opinion, with regard to other claims raised therein.
It has been brought to our notice on behalf of the respondent Railway Administration that the appellants have been occupying the Railway quarter which had been allotted to late Issac Alfred, even though they are not entitled to occupy the same.
On behalf of the appellants, it was urged that since they had not been paid any dues by the Railway Administration they were not in a position to vacate the premises.
The Railway Administration is free to evict them in accordance with the Rules, only after arrears of family pension are paid to Mrs. Violet Issac.
The Railway Administration will charge rent from the appellants at the rate on which the quarter had been let out to the deceased Railway employee.
There will be no order as to costs.
V.P.R. Appeal allowed.
| On the death of a Railway employee, dispute arose among his wife, sons, daughters and brother for the family pension, gratuity and other emoluments.
The brother of the deceased employee filed a civil suit in the court of Sub judge for a permanent injunction restraining the appellants. the wife, sons and daughter from claiming or receiving any monetary benefits from the Railway Administration, contending that by a will dated 9.9.1984 of the deceased employee, he was entitled to receive the benefits to the deceased employee 's widow.
The Railway Authority did not pay any amount, as an injunction had been issued by the Civil Court.
The appellants there upon made an application before the Central Administrative Tribunal for a direction for the release of the amounts on the grounds that the will was a forged one, and the beneficiary was not entitled to receive pensionary benefits.
The Tribunal held that since the dispute related to rival claims based on title arising from relationship, it had no jurisdiction to decide the same.
It also directed transfer of the case to the Civil Court for trial.
In the appeal to this court on the question was: whether family pension payable under the service rules could be bequeathed by means of a will.
Allowing the appeal, this Court, HELD: 1.
Family Pension Rules, 1964 provided for the sanction of family pension to the survivors of a Railway Employee.
Rule 801 provides that family pension shall be granted to the widow/widower and where there is no widow/widower, to the minor children of a Railway servant, who may have died while in service.
Under the Rules, son of 283 the deceased is entitled to family pension until he attains the age of 25 years, an unmarried daughter is also entitled to family pension till she attains the age of 25 years or gets married, whichever is earlier.
The Rules do not provide for payment of Family Pension to brother or any other family member or relation of the deceased Railway employee.
The Family Pension Scheme under the Rules is designed to provide relief to the widow and children by way of compensation for the untimely death of the deceased employee.
The rules do not provide for any nomination with regard to family pension, instead the Rules designate the persons who are entitled to receive the family Pension.
Thus, no other person except those designated under the Rules are entitled to receive family pension.
[285E H] 2.
The Family Pension Scheme confers monetary benefit on the wife and children of the deceased Railway employee, but the employee has no title to it.
The employee has no control over the family pension as he is not required to make any contribution to it.
The family pension Scheme is in the nature of welfare scheme framed by the Railway administration to provide relief to the widow and minor children of the deceased employee.
[285H 286B] 3.
Since, the Rules do not provide for nomination of any person by the deceased employee during his life time for the payment of family pension, he has no title to the same.
Therefore, it does not form part of his estate enabling him to dispose of the same by testamentary dis position.
[286B C] [The appellant No. 1, widow of the deceased Railway employee is entitled to receive the family pension, notwithstanding the will alleged to have been executed by the deceased on 9.9.1984 in favour of his brother.
As regards appellant Nos. 2 to 6 are concerned, they are not minors, therefore, under the Rules they are not entitled to any family pension.
[286F H] The Railway Administration is free to evict them in accordance with the Rules, only after arrears of family pension are paid to the widow.] [287B C] Jodh Singh V. Union of India & Anr., [1980] 4 S.C.C. 306, followed.
|
Civil Appeal No. 1501 of 1978.
Appeal by Special Leave from the Judgment and Order dated 18 1 1978 of the Delhi High Court in Civil Misc.
Petition No. 1120 W of 1977 and 109/78 in Writ Petition No. 585/77.
Soli J. Sorabjee Addl.
General, Girish Chandra for the Appellant.
13 549 SCI/78 736 section T. Desai, B. P. Maheshwari and Suresh Sethi for Respondent No. 1.
A. K. Sen and Vineet Kumar for Respondent No. 2.
ORDER An ad interim order of stay passed by the High Court of Delhi has been challenged before us in this appeal.
We should have hesitated to interfere with an interlocutory order following the usual practice in this Court.
But, where repercussions are incalculable and the basis of the direction; though interlocutory, is obscure, the ends of justice dominate and we may interfere if public interest so dictates.
Here is an order of the Company Law Board under sec.
408(1) of the , which gives a wealth of facts and a variety of reasons to support an ultimate direction which runs thus: "Since all the three conditions referred to in sub section (1) of sec.
408 of the , are established on the facts and circumstances of the case, the Company Law Board hereby appoint officers for three years, in addition to the existing directors of the company: 1.
Shri B. M. Kaul, Member, Railway Board (Retd.) 5 J 4 Jawahar Nagar, Jaipur.
Shri A. K. Mazumdar, Chief Secretary, Orissa Govt.
(Retd.) 26/2, Dover Road, Apartment No. 4, Calcutta 19. 3.
Shri P. K. Choksi, Senior Partner, Price Water house Pest & Co., B 4, Gillander House, Calcutta 1. 4.
Shri section K. Mitra, President, Institute of Cost & Works Accounts of India, 14 A/6 Western Extension Area, Karol Bagh, New Delhi 5. 5.
Shri P. A. section Rao, Formerly President of the Institute of Company Secretaries of India, C 7/7, Vasant Vihar, New Delhi.
Shri M. C. Bhatt, Joint Secretary, Govt.
of India (Retd.) B 22, Defence Colony, New Delhi 24. 7.
Shri Triloki Nath Sharma, Business Executive, 247, Mohan Nagar, G. T. Road, Sahibabad, Ghaziabad (U.P.) 737 The Company Law Board direct further under sub section (6) of sec.
408 of the Act that Shri B. M. Kaul will act as Chairman of the Board of Directors of the Company.
In accordance with the order passed by the Delhi High Court on 24th August, 1977, referred to hereinbefore the implementation of this order will be subject to any order that may be passed by the Delhi High Court in the matter pending before it." This order, which inducted seven additional directors was based on the ground that the affairs of the company in question "are being conducted in a manner which is prejudicial to the interests of the company and to public interest." The High Court, after hearing counsel on both sides, passed a laconic order that: "We consider that the proper order to be made, in view of the circumstances of the case, is to stay the operation of the order of the Company Law Board, dated 17th December, 1977, except as regards Shri P. K. Choksi, Shri section K. Mitra and Shri P. A. Rao, and also to direct that the said three gentlemen will not vote at the meetings of the Board of Directors till the disposal of the writ petition.
We order accordingly.
" A company of considerable financial dimensions and involved in operations using public resources as investment, naturally becomes the concern not merely of the Company Law Board but also of the economic process of the country.
The specialised body with responsibility to watchdog corporate process, is the Company Law Board.
When it investigates and reaches a definite conclusion and makes a consequential direction, it is entitled to prima facie respect unless there are glaring circumstances to the contrary.
We do not wish to make any observations on the merits of the matter since the High Court is seized of the case.
It may well be that the order of the Board may be vitiated by infirmities, legal or other.
It may also be that the reasoning of the Board and the factual foundation for it is sound.
In such situations, acting at an interlocutory stage, the benefit of reasonable doubt belongs to the specialised body.
Of course, as stated earlier, if there are good grounds to strike down the order, certainly the High Court has jurisdiction to stay its operation.
However, we find nothing stated in the order itself indicating why the High Court prima facie thought it necessary substantially to stay the operation of the Company Law Board 's order of induction of seven persons as directors.
Nor have we any light regarding the total eclipse of four directors and the partial eclipse of the other three.
Unfortunately, the inscrutable face of a sphinx does not go well with the judicial process.
Whatever might have been 738 the basis of the High Court 's order we do not make any comments thereon we are inclined to nullify the interim stay.
Our inclination is explained by the prefatory observations we have earlier made in this order.
To expatiate more may prejudice one side or the other.
To indicate this much is obligatory to explicate ourselves.
There was some argument at the Bar about an order under sec.
18AA of the Industries (Development and Regulation) Act, 1951, and its impact upon the order impugned before us.
Maybe, by virtue of that appointment, the entire company comes under the control of the authorised person appointed under that provision.
It is not for us to explore here the effect and import of the order of the Central Government under section 18AA and we desist from doing so.
All that we need do and that we can do in the present appeal is to allow it so that the Company Board 's direction in regard to seven additional directors will come into full force until the final decision of the High Court.
We allow the appeal.
We may make it clear that the learned Additional Solicitor General did assure the court that nothing which will stultify the two writ petitions before the High Court will be done by the Company Law Board or the Central Government.
We hope the High Court will dispose of the case very expeditiously.
S.R. Appeal allowed.
| The Company Law Board by its order dt.
17th December, 1977 inducted several additional directors in addition to the existing directors of the respondent company, under section 408(1) of the , since it was of the opinion that the affairs of the company in question "are being conducted in a manner which is prejudicial to the interest of the company and to public interest".
But the Delhi High Court passed an ad interim stay of the said orders, while admitting the writ Petition.
Allowing the appeal by special leave, the Court ^ HELD: Where repercussions are incalculable and the basis of the direction, though interlocutory, is obscure, the ends of justice dominate and the Supreme Court may interfere, if public interest so dictates under article 136 of the Constitution.
[736B] (2) A company of considerable financial dimensions and involved in operations using public resources as investment naturally becomes the concern not merely of the Company Law Board but also all of the economic process of the country.
The specialised body with responsibility to watchdog corporate process is the Company Law Board.
When it investigates and reaches a definite conclusion and makes a consequential direction, it is entitled to prima facie respect unless there are glaring circumstances to the contrary.
It may well be that the order of the Board may be vitiated by infirmities, legal or other.
It may also be that the reasoning of the Board and the factual foundation for it is sound.
In such situations acting at an interlocutory stage, the benefit of reasonable doubt belongs to the specialised body.
If there are good grounds to strike down the order certainly the High Court has jurisdiction to stay its operation.
[737D G]
|
l Appeal No. 1803 of 1070 From the Judgment and order dated 6.8.1968 of Patna High Court in first appeal No. 444 of 1967.
D.N. Mukherjee, Ranjan Mukherjee, A.K. Ganguli & S.C. Ghosh for the appellant.
R.B. Datar and Ms. Vina Tamta for the respondents.
The Judgment of the Court was delivered by DEASI J.
Appellant, an employee of Tata Iron and Steel Company Limited (`Company ' for short) has been chasing a mirage.
to wit to recover a paltry sum of Rs 14040 being the amount of gratuity to which he was entitled for the continuous service rendered by him from December 31, 1929 till August 31, 1959 under what are styled as Retiring Gratuity Rules, 1937 (`Gratuity Rules ' for short) from the Company and in this wholly unequal fight he laid down his life before enjoying the pittance to which he was entitled after three decades of loyal service.
What a dreadful return for abject loyalty? When the appellant retired by resignation from service he was paid his provident fund dues but gratuity which he was entitled to be paid under the relevant rules was not paid to him.
When the appellant claimed payment of gratuity, the respondent turned deal 329 ears to it.
Appellant sevred a notice dated September 6, 1981 calling upon the respondent to pay the amount of gratuity being Rs. 14040 .
The Company did not respond to the notice.
Thereupon the appellant filed M.S. No. 452 of 1962 in the court of Subordinate Judge at Jamshedpur.
The respondent appeared and contested the suit inter alia contending that `in terms of the contract of service and particularly having regard to the relevant rules under which gratuity can be claimed, the same is payable on certification of satisfactory service by the head of the department, and it is payable at the absolute discretion of the Company irrespective of whether the employee has or has not performed all or any of the conditions stated in the rules and no employee howsoever otherwise eligible is entitled as of right to any payment under the rules. ' The learned trial Judge framed the issues on which parties were at variance.
The learned Judge held that the plaint does disclose a cause of action and the plaintiff was entitled to claim and recover the amount of gratuity with interest thereon.
Accordingly, the suit was decreed against the.
Company directing it to pay the amount claimed in the plaint with future interest at 6% per annum with costs.
The respondent Company preferred First Appeal No. 444 of 1963 in the High Court of Judicature at Patna.
A Division Bench of the High Court held: i) that the service conditions of the plaintiff were governed by the Works Standing orders and that it was an implied condition of service that the plaintiff could get gratuity in accordance with the Gratuity Rules; (ii) that in view of Rule 6, an employee governed by the Gratuity Rules is not entitled to claim the same as a matter of right but he merely attains the benefit of eligibility or suitability for the retiring gratuity and not the right; iii) that until and unless the Company has decided to pay the gratuity in accordance with Rule 7 or otherwise, the mere fact of the employee becoming eligible to get it under the relevant rules which can be enforced in a civil court because the matter of payment of gratuity is at the absolute discretion of the Company as provided in Rule 10, and the employee, howsoever unfortunate the position may be under the modern stage of the society is not entitled to claim it as a matter of right because even though payment of gratuity under the Gratuity Rules is an implied condition of service, 330 yet the condition is further conditioned by the provisions made in the Rules and is subject to them; iv) that such a claim may enforced before the Industrial Tribunal under the but it is not possible to hold that the law of contract or the law of master and servant which is the only law to be enforced in a civil court can justify on interpretation of the Gratuity Rules in question that the plaintiff can be granted decree for payment of gratuity on the footing that it was the unconditional or unconditioned contractual obligation of the employer to pay such a money; v) the payment of gratuity money is not a gift pure and simple, but under the relevant rules it is in the nature of an inchoate claim or interest and not a right enforceable by a suit in court, because under the contract of service, the grant of gratuity has been left to the sole discretion of the employer as the relevant rules provided that no employee howsoever otherwise eligible shall be deemed to be entitled as of right to any payment under the rules.
Accordingly the appeal was allowed and the judgment and decree of the trial court were set aside and the plaintiff 's suit was dismissed, directing the parties to bear their costs.
Hence this appeal by the plaintiff by special leave.
At the outset it is necessary to notice the relevant rules relied upon by the respondent in support of its submission that the gratuity cannot be claimed as a matter of right and the claim to gratuity cannot be enforced in the civil court.
The Retiring Gratuity Rules came into force with effect from April 1, 1937 and at the relevant time, the rules as amended in 1948 were in operation.
Rule 5 provides for retirement of every uncovenanted employee of the Company on attaining the age of 60 years subject to the right of the company to grant extension.
This rule is a mere incorporation of S.O. 54 which provides for retirement on attaining the age of 60.
Rules 6, 7 and 10 may be extracted: "6.
(a) Subject to the conditions referred to in these rules, every permanent uncovenanted employee of the Company, whether paid on monthly, weekly or on daily basis, including those borne on the pay rolls of the Company of the Collieries and at ore Mines and Quarries, will be eligible for a retiring gratuity which shall be equal to half a month 's salary or wages for every completed year of continuous service, 331 subject to a maximum of twenty months salary or wages in all, (b) Provided that when an employee dies, retires or is discharged under Rule 11(2)(ii) and (iii) hereof, before he has served the Company for a continuous period of 15 years, a gratuity ordinarily limited to half a month 's salary or wages for each qualifying year may be paid subject, however, to a maximum of 6 months ' salary or wages in all.
(Amended vide Board Resolution No. VII dated 2nd July, 1953.) (c) The retiring gratuity will be based on the rate of the salary or wages applicable to the employee in the last month of active service or if the employee has retired while on leave, in the last month prior to the employee going on leave.
(d) In the case of an uncovenanted employee who has been transferred to another Tata concern, the retiring gratuity payable to him under Rule (4) 8 (a) hereunder will be based on the rate of the salary or wages applicable to the employee in the last month of service with the Company, (In force from 1.4.1946 as per Board Resolution dated 8.4.1948.) 7.
Notwithstanding anything contained in these Rules a gratuity shall become due and be payable and shall always have been deemed to have become due and payable only in such instalments and over such period or periods as may be fixed by the Board of Directors of the Company or subject to the direction of the Board by the Managing Agents.
Until any such instalment shall become or have become due and payable, the employee or any dependent who qualifies for payment under the Gratuity Rules shall not be eligible to receive or be paid any such instalment of the gratuity.
All retiring gratuities granted under these Rules other than special gratuity to be paid under the provisions of Rule 22 hereof shall be at the absolute discretion of the Com 332 pany irrespective of whether an employee has or has not performed all or any of the conditions herein after stated and no employee howsoever otherwise eligible shall be deemed to be entitled as of right to any payment under these Rule.
(Amended vide Board Resolution No. v dated 25.8.1955).
" The contention of the respondent is that the plaintiff did not retire from service but he left the service of the Company by resigning his post.
This aspect to some extent agitated the mind of the High Court.
It may be dealt with first.
It is not only not in dispute, but is in fact conceded that the plaintiff did render continuous service from December 31, 1929 till August 31, 1959.
On exact computation, the plaintiff rendered service for 29 years and 8 months.
Rule 6(a) which prescribed the eligibility criterion for payment of gratuity provides that every permanent uncovenanted employee of the Company whether paid on monthly, weekly or daily basis will be eligible for retiring gratuity which shall be equal to half a month salary or wages for every completed year of continuous service subject to a maximum of 20 months salary or wages in all provided that when an employee dies, retires or is discharged under Rule 11(2)(ii) and (iii) before he has served the Company for a continuous period of 15 years he shall be paid a gratuity at the rate therein mentioned.
The expression 'retirement ' has been defined in Rule 1 (g) to mean 'the termination of service by reason of any cause other than removal by discharge due to misconduct '.
It is admitted that the plaintiff was a permanent uncovenanted employee of the Company paid on monthly basis and he rendered service for over 29 years and his service came to an end by reason of his tendering resignation which was unconditionally accepted.
It is not suggested that he was removed by discharge due to misconduct.
Unquestionably, therefore, the plaintiff retired from service because by the letter Annexure 'B ' dated August 26, 1959, the resignation tendered by the plaintiff as per his letter dated July, 27, 1959 was accepted and he was released from his service with effect from September 1,1959.
The termination of service was thus on account of resignation of the plaintiff being accepted by the respondent.
The plaintiff has, within the meaning of the expression, thus retired from service of the respondent an he is qualified for payment of gratuity in terms of Rule 6. 333 Rule 7, in our opinion, has hardly any relevance because it enables the Company to pay gratuity by instalments.
It is Rule 10 which is material for the purpose.
It provides that payment of retiring gratuity under the Gratuity Rules, other than special gratuity to be paid under the provisions of Rule 22 which is not the case herein, shall be at the absolute discretion of the Company irrespective of whether an employee has or has not performed all or any of the conditions hereinafter stated, and no employee howsoever otherwise eligible shall be deemed to be entitled as of right to any payment under the rules.
The stand taken by the respondent to deny gratuity to the plaintiff is that gratuity payable under the rules is a matter of employer 's largesse to be distribute at the absolute discretion of the Company and cannot be claimed as a matter of right even if the concerned employees has fulfilled the eligibility criteria.
It is the interpretation of this Rule which would govern the outcome of this appeal.
It may be mentioned that the High Court which ultimately upheld the contention of the respondent has specifically held that gratuity was an implied condition of service of the plaintiff in accordance with the relevant rules.
The High Court reached this conclusion by first referring to Works Standing Orders framed by the Company which govern the conditions of service of the plaintiff.
In other words according to the High Court, the service conditions of the plaintiff were governed by the Works Standing Orders.
It is therefore necessary to determine the character of the Works Standing Orders Exh.
C framed by the Company.
This aspect was overlooked by the High Court with the consequence that the High Court found it difficult to enforce the claim of gratuity against the respondent by a decree of the court.
What then is the character of the Works Standing Orders framed by the Company ? Are they mere unenforceable rules or are they statutory in character or have a statutory flavour ? If they are statutory in character and they form part of the contract of service of every employee governed by the same, then the question would be whether its breach can be repaired or enforced by a civil suit ? The Parliament enacted the ( '1946 Act ' for short).
The long title of the Act provides that it was an act to require employers in industrial establishments formally to define conditions of employment under them.
334 The preamble of the Act provides that it is expedient to require employers in industrial establishments to define with sufficient precision the conditions of employment under them and to make the said conditions known to workmen employed by them.
By Section 3, a duty was cast on the employer governed by the Act to submit to the Certifying Officer draft standing orders proposed by him for adoption in his industrial establishment.
After going through the procedure prescribed in the Act, the Certifying Officer has to certify the draft standing orders.
Section 8 requires the Certifying Officer to keep a copy of standing orders as finally certified under the Act in a register to be maintained for the purpose.
Sub sec.
2 of Section 13 imposes penalty on employer who does any act in contravention of the standing orders finally certified under the Act.
The act was a legislative response to the laissez fairs rule of hire and fire at sweet will.
It was an attempt at imposing a statutory contract of service between two parties unequal to negotiate, on the footing of equality.
This was vividly noticed by this Court in Western India Mntch Company Ltd. vs Workmen as under : "In the sunny days of the market economy theory people sincerely believed that the economic law of demand and supply in the labour market would settle a mutually beneficial bargain between the employer and the workmen.
Such a bargain they took it for granted, would, secure fair terms and conditions of employment to the workman.
This law they venerated as natural law.
They had an abiding faith in the verity of this law.
But the experience of the working of this law over a long period has belied their faith.
" The intendment underlying the Act and the provisions of the Act enacted to give effect to the intendment and the scheme of the Act leave no room for doubt that the Standing Orders certified under the 1946 Act become part of the statutory terms and conditions of service between the employer and his employee and they govern the relationship between the parties.
Workmen of Messrs Firestone Tyre & Rubber Co. of India (P) Ltd. vs Management and Ors.
Workmen in Buckinghan and Carnatic Mills Madras vs Buckingham and Carnatic Mills and M/s Glaxo Laboratories (l) 335 Ltd. vs The Presiding Officer, Labour Court, Meerut & Ors.
The High Court recorded the finding that service conditions of the plaintiff were governed by the Works Standing Orders.
No exception has been taken to this finding.
It may at once be noted that the Works Standing Orders of the Company are Certified Standing Orders, under the 1946 Act evidenced by Certificate No. 45 dated March 18, provides that every uncovenanted employee of the Company shall retire from service on attaining the age of 60 years.
This S.O. 54 is bodily incorporated in Rule 5 of the Gratuity Rules.
Relying on S.O. 54 and the evidence recorded in the case, the High Court reached the conclusion that payment of gratuity was an implied condition of service of the plaintiff.
Rule 6(a) provides that 'subject to the conditions prescribed in the rules, every permanent uncovenanted employee of the Company will be eligible for a retiring gratuity in the manner and to the extent for a retiring gratuity in the manner and to the extent mentioned therein.
Retiring gratuity becomes payable on retirement, which means termination of service by reason of any cause other than removal by discharge due to misconduct.
On a combined reading of S.O. 54 and the Rule 5 of the Gratuity Rules the High Court rightly concluded that payment of gratuity was a condition of service but somehow the High Court qualified it by saying that it was an implied condition of service.
It is well settled by a catena of decisions, that Certified Standing Orders bind all those in employment at the time of service as well as those who are appointed thereafter. ' Agra Electricity Supply Co. Ltd. vs Sri Alladin & Ors.
Now upon a combined reading of S.O. 54 along with Rule 5 and 6(a) of the Gratuity Rules, it becomes distinctly clear that payment of gratuity was an express or statutory condition of service and to this limited extent the finding of the High Court has to be modified.
If payment of gratuity is thus shown to be a statutory or express condition of governing the relationship between the plaintiff and the company, it would be obligatory upon the company to pay the gratuity on retirement of the plaintiff.
If the company declines or refuses to pay or discharge its statutory obligation, could the claim be enforced by a civil suit ? The High Court was of the opinion 336 that even though payment of gratuity was a condition of service in view of the provision contained in Rule 10, the same cannot be claimed as a matter of right or its recovery cannot be enforced by a civil suit.
The High Court was constrained to observe that Rule 10 which confers absolute discretion on the Company to pay the gratuity at its sweet will is unconscionable and incompatible with the modern notions or conditions which ought to govern the relations between employer and that upon an industrial dispute being raised, the Industrial Tribunal may be in a position to award the gratuity as a matter or right even under the existing rules, but according to High Court, it cannot be enforced by a civil suit.
In reaching this conclusion the High Court overlooked the effect of certified Standing Orders and the inter relation between the Retiring Gratuity Rules and S.O. 54.
At this stage it would be appropriate to examine the effect of a breach of condition of service which is either statutory in character or has the statutory flavour.
When under 1946 Act, an obligation is cast on the employer to specifically and precisely lay down the conditions of service, Sec.
13(2) subjects the employer to a penalty if any act is done in contravention of the Standing Orders certified under the Act.
It would appear that such conditions of service prescribed in Standing Orders get incorporated in the contract of service of each employee with his employer.
A facet of collective bargaining is that any settlement arrived at between the parties would be treated as incorporated in the contract of service of each employee governed by the settlement.
Similarly certified Standing Orders which statutorily prescribe the conditions of service shall be deemed to be incorporated in the contract of employment of each employee with his employer.
As far as the incorporation of the results of collective bargaining into the individual contract of employment is concerned, the courts have in effect created a presumption of more or less systematic translation of the results of collective bargaining into individual contracts where these results are in practice operative and effective in controlling the terms on which employment takes place: (Labour Law Text and Materials by Paul Davies and Mark Freedland p. 233) O Kahn Freund describes collective bargaining as crystalised custom to be imported into contracts of employment on the same basis as trade custom (System of Industrial Relations in Great Britain p. 58 59).
This would be all the more true of certified Standing Orders governing conditions of service between workman and his employer.
If the employer commits a breach of the contract of employment, the same can be en 337 forced or remedied depending upon the relief sought by a civil suit.
If contract for personal service is sought to be specifically enforced by a decree of civil court, the court will have to keep in view the provisions of Sec.
14 of the which provides that contract for personal service cannot be specifically enforced.
We are not concerned with the exceptions to this rule such as the power of Industrial Tribunal to grant relief of reinstatement.
We are concerned with the jurisdiction of civil court.
The jurisdiction of civil court amongst others is determined by the nature of relief claimed.
Now if the relief claimed is a money decree by enforcing statutory conditions of service, the civil court would certainly have jurisdiction to grant the relief.
Plaintiff filed the suit alleging that he was entitled to payment of gratuity on completion of service for the period prescribed.
He alleged it and the High Court accepted it as a condition of service.
Its breach would give rise to a civil dispute and civil suit would be the only remedy.
In the case of workman governed by the may provide an additional forum to recover monetary benefit.
It is not suggested that plaintiff was a workman governed by the .
The High Court was, therefore, in error in holding that the remedy was only by way of an industrial dispute and not by a civil suit.
In reaching this conclusion, the Court High closed the door of justice to every employee though entitled to gratuity but would not be a workman within the meaning of the to recover the same, except where a prosecution can be successfully launched for an offence under Sec.
13(2) against the employer.
One more difficulty the High Court experienced in the way of the plaintiff maintaining the suit and recovering the amount of gratuity was that under Rule 10 gratuity was payable at the absolute discretion of Company and cannot be claimed as a matter of right.
Undoubtedly, Rule 10 confers discretion on the company to pay the gratuity even if the same is earned by satisfying the conditions subject to which gratuity becomes payable.
Rule 10 provides that jail retiring gratuities granted under the rules shall be at the absolute discretion of the Company irrespective of whether an employee has or has not performed all or any of the conditions set out in the rules and no employee howsoever otherwise eligible shall be deemed to be entitled as of right to any payment under the rules. ' Such absolute discretion is wholly destructive of the character of gratuity as a retiral benefit.
It is satisfactorily established and the High 338 Court has so ruled that payment of gratuity was a condition of service albeit implied condition of service which part does not stand scrutiny.
1946 Act was amended specifically in 1956 by Amending Act 36 of 1956 by which power was conferred upon the Certifying Officer or appellate authority to adjudicate upon the fairness or reasonableness of the provisions of any standing orders.
It is not clear whether the Rule 10 which appears to have been framed in the heyday of laissez faire has been recast, modified or amended to bring the same in conformity with the modern notions of social justice and Part IV of the Constitution.
Assuming it is not done, the court while interpreting and enforcing the relevant rules will have to bear in mind the concept of gratuity.
The fundamental principle underlying gratuity is that it is a retirement benefit for long service as provision for old age.
Demands of social security and social justice made it necessary to provide for payment of gratuity.
On the enactment of a statutory liability was cast on the employer to pay gratuity.
Pension and gratuity coupled with contributory Provident Fund are well recognised retiral benefits.
These retiral benefits are now governed by various statutes such as the Employees Provident Fund and Miscellaneous Provisions Act, 1952, the .
These statutes were legislative responses to the developing notions of fair and humane conditions of work, being the promise of of the Constitution.
article 37 provides that the provisions contained in Part IV Directive Principles of State Policy, shall not be enforceable by any court, but the principles therein laid down are nevertheless fundamental in the governance of the country and it shall be the duty of the State to apply these principles in making laws.
" article 41 provides that 'the State shall within the limits of its economic capacity and development, make effective provision for securing the right to work, to education and to public assistance in cases of unemployment, old age, sickness and disablement, and in other cases of undeserved want. ' article 43 obligates the State to secure, by suitable legislation to all workers, a living wage, conditions of work ensuring a decent standard of life and full enjoyment of leisure. . ' The State discharged its obligation by enacting these laws.
But much before the State enacted relevant legislation, the trade unions either by collective bargaining or by statutory adjudication acquired certain benefits, gratuity being one of them.
Pension and gratuity are both retiral benefits ensuring that the workman who has spent his useful span 339 of life in rendering service and who never got a living wage, which would have enabled him to save for a rainy day, should not be reduced to destitution and penury in his old age.
As a return of long service he should be assured social security to some extent in the form of either pension, gratuity or provident fund whichever retiral benefit is operative in the industrial establishment.
It must not be forgotten that it is not a gratuitous payment, it has to be earned by long and continuous service.
Can such social security measures be denuded of its efficacy and enforcement by so interpreting the relevant rules that the workman could be denied the same at the absolute discretion of the employer notwithstanding the fact that he or she has earned the same by long continuous service ? If Rule 10 is interpreted as has been done by the High Court, such would be the stark albeit unpalatable outcome.
It is therefore necessary to take a leaf out of history bearing on the question of retiral benefits like pension to which gratuity is equated.
In Burhanpur Tapti Mills Ltd. vs Burhanpur Tapti Mills Mazdoor Sangh wherein this Court observed that :" a Scheme of gratuity and a scheme of pension have much in common.
Gratuity is a lump sum payment while pension is a period payment of a stated sum.
" Undoubtedly both have to be earned by long and continuous service.
For centuries the courts swung in favour of the view that pension is either a bounty or a gratuitous payment for local service rendered depending upon the sweet will or grace of the employer not claimable as a right and therefore, no right to pension can be enforced through court.
This view held the field and a suit to recover pension was held not maintainable.
With the modern notions of social justice and social security, concept of pension underwent a radical change and it is now well settled that pension is a right and payment of it does not depend upon the discretion of the employer, nor can it be denied at the sweet will or fancy of the employer.
Deokinandan Prasad vs State of Bihar & Ors., State of Punjab & Anr.
vs Iqbal Singh and D.S. Nakara & Ors.
vs Union of India.
If pension which is the retiral benefit as a measure of social security can be recovered 340 through civil suit, we see no justification in treating gratuity on a different footing.
Pension and gratuity in the matter of retiral benefits and for recovering the same must be put on par.
The question then is: Can the court ignore Rule 10 ? If gratuity is a retiral benefit and can be earned as a matter of right on fulfilling the conditions subject to which it is earned, any rule conferring absolute discretion not testable on reason, justice or fair play must be treated as utterly arbitrary and unreasonable and discarded.
If rules for payment of gratuity became incorporated in the Standing Orders and thereby acquired the status of statutory condition of service, an arbitrary denial referable to whim, fancy or sweet will of the employer must be rejected as arbitrary.
Sec. 4 of the 1946 Act which confers power on the Certifying Officer or appellate authority to adjudicate upon the fairness or reasonableness of the provisions would enable this Court to reject that part of Rule 10 conferring absolute discretion on the employer to pay or not to pay the gratuity even if it is earned as utterly unreasonable and unfair.
It must be treated as ineffective and unenforceable.
It is well settled that if the Certifying Officer and the appellate authority under the 1946 Act while certifying the Standing Orders has power to adjudicate upon the fairness or reasonableness of the provisions of any standing orders, this Court in appeal under article 136 shall have the power to do the same thing when especially it is called upon to enforce the unreasonable and unfair part of the Standing Order.
It therefore follows that part of Rule 10 which confers absolute discretion on the employer to pay gratuity even if it is earned, at its absolute discretion is ineffective and unenforceable.
This approach does not acquire any precedent but if one is needed the decision of this Court in Western India Match Company Ltd. case clearly rules to that effect.
In that case, the company relied on a special agreement which was to some extent in derogation of the provisions of the certified Standing Order.
The Court observed that to uphold such special agreement would mean giving a go by to the principle of three party participation, in the settlement of the terms of employment, as represented by the certified Standing Orders and therefore, the inconsistent part of special agreement is ineffective and unenforceable.
The claim to absolute discretion not to pay gratuity even when it is earned is a hangover of the laissez faire days and utterly inconsistent with the modern notions of fair industrial relations and therefore, it must be rejected as ineffective and hence unenforceable.
341 Viewed from a slightly different angle, our Constitution envisages a society governed by rule of law.
Absolute discretion uncontrolled by guidelines which may permit denial of equality before law is the anti thesis of rule of law.
Absolute discretion not judicially reviewable inheres the pernicious tendency to be arbitrary and is therefore violative of article 14.
Equality before law and absolute discretion to grant or deny benefit of the law are diametrically opposed to each other and cannot co exist.
Therefore, also the conferment of absolute discretion by Rule 10 of the Gratuity Rules to give or deny the benefit of the rules cannot be upheld and must be rejected as unenforceable.
The High Court reversed the decree of the trial court on the sole ground that Rule 10 confers an absolute discretion on the respondent company to pay or not to pay gratuity at its sweet will.
Once Rule 10 is out of the way, the judgment of the High Court has to be reserved.
Accordingly, this appeal succeeds and will have to be allowed.
The trial court decreed the plaintiff 's suit with costs and with interest at 6% per annum.
Interest at 6% per annum has become utterly irrelevant in these days with devaluation of the rupee.
Further in our opinion, the company declined to meet its obligation on an utterly unreasonable stand and denied to the plaintiff or a period of a quarter of a century what the plaintiff was legitimately entitled without the slightest shadow of doubt.
Therefore, while allowing the appeal in order to compensate the loss suffered by the plaintiff who died before enjoying the fruits of his decree, we direct that the interest shall be paid at 15% per annum and full costs throughout.
Accordingly, this appeal is allowed and the judgment and decree of the High Court are set aside and the decree of the trial court is restored with this modification that the interest shall be paid on the principal amount of Rs. 14,040 at 15% from 1.7.1959 till payment and full costs throughout be paid to the plaintiff.
The costs plaintiff in this Court is quantified at Rs. 5,000.
The payment shall be made within a period of two months from today.
H.S.K. Appeal allowed.
| The appellant who resigned from service of the respondent company after serving for over 29 years was not paid retiring gratuity by the respondent, even when the appellant had become eligible for it under the relevant gratuity rules styled as the Retiring Gratuity Rules, 1937 (Gratuity Rules for short).
The appellant filed a suit in the Court of Subordinate Judge for recovering the amount of gratuity.
The Subordinate Judge decreed the suit.
The High Court allowed the appeal filed by the respondent.
Hence this appeal.
The respondents submitted; (1) that since the appellant did not retire from the service but left the service by resigning the post, he was not eligible for gratuity under Rule 6 of the Retiring Gratuity Rules, 1937; (2) that under Rule 10 the retiring gratuity was payable at the absolute discretion of the respondent and could not be claimed as a matter of right by the appellant even if he had become eligible for it; and (3) that claim to gratuity could not be enforced in the civil court.
Allowing the appeal ^ HELD: Rule 6(a) which prescribed the eligibility criterion for payment of retiring gratuity provides, inter alia, that every permanent uncovenanted employee of the Company, will be eligible for retiring gratuity.
The expression `retirement ' has been defined in Rule 1(g) to mean `the termination of service by reason of any cause other then removal by discharge due to misconduct '.
It is admitted that the appellant was a permanent uncovenanted employee of 326 the Company paid on monthly basis and he rendered service for over 29 years and his service came to an end by reason of his tendering resignation which was unconditionally accepted.
It is not suggested that he was removed by discharge due to misconduct.
Unquestionably.
therefore, the appellant has within the meaning of the expression, thus retired from service of the respondent and he is qualified for payment of gratuity in terms of Rule 6.
[ 332D F] According to the High Court, the service conditions of the appellant were.
governed by the Works Standing orders of the respondent.
No exception has been taken to this finding.
These Works Standing orders were framed and certified under the Industrial Employment (Standing orders) Act, 1946.
The Act was a legislative response to the laissez faire rule of hire and fire at sweet will.
It was an attempt at imposing statutory contract of service between two parties unequal to negotiate, On the footing of equality.
The intendment underlying the Act and the provisions of the Act enacted to give effect to the intendment and the scheme of the Act leave no room for doubt that Standing orders certified under the Act become part of the statutory terms and conditions of service between the employer and his employee and they govern the relationship between the parties.[333E 334G] Western India Match Company Ltd. vs Workman; [1974] I SCR 434.
Work man of Messrs Firestone Tyre & Rubber Co of India (P) Ltd. vs Management and ors; ; at 612.
Workman in Buckingham and carnatic Mills Madras vs the presiding Officer, labour Court, Meerut & Ors; [1984] 1 SCC 1.
Agra Electricity Supply co. Ltd. vs Sri Alladin & Ors;[1970] 1 SCR 806, referred to Upon a combined reading of Standing order (S.O) 54 along with Rule 5 and 6(a) of the Gratuity Rules, it becomes distinctly clear that payment of gratuity was an express or statutory conditions of service governing the relationship between the appellant and the respondent.
Therefore, it would be obligation upon the respondent to pay gratuity on retirement to the appellant.
If the respondent refuses to pay or discharge its statutory obligation, the claim can be enforce by a civil suit.
The High Court was of the opinion that in view of Rule 1 of the Gratuity Rules, recovery of gratuity cannot be enforced by a civil suit.
But upon an Industrial dispute being raised, the Industrial Tribunal may be in a position to award the gratuity as a matter or right even under the existing rules.
In reaching this conclusion the High Court overlooked the effect of the certified Standing orders and the inter relation between the Gratuity Rules and S.O 54, When under 1946 Act, an obligation is cast on the employer to specifically and precisely lay down the conditions of service, Sec.
13(2) subjects the employer to a penalty if any act is done in contravention of the Standing orders certified under the.
A face of collective bargaining is that any settlement.
arrived at between the parties would be treated as incorporated in the contract of service of each employee governed by the settlement.
Similarly, certified standing Orders which statutorily prescribe the conditions of service shall be deemed to be incorporated in the contract of employment of each employee with his employer.
If the employer commits a breach of the contract of employment the same can be enforced or remedied depending upon the 327 relief sought by a civil suit.
The jurisdiction of civil court amongst others is determined by the nature of relief claimed.
If the relief claimed is a money decree by enforcing statutory conditions of service, the civil court would certainly have jurisdiction to grant the relief.
[335F 337B] Labour Law Text and Materials by Paul Davies and Mark Freedland p 233 and system of Industrial Relations in Great B itain p. 58 59, referred to.
In the instant case, the appellant filed the suit alleging that he was entitled to payment of gratuity on completion of service for the period prescribed.
He alleged it and the High Court accepted it as a condition of service.
Its breach would give rise to a civil dispute and civil suit would be the only remedy.
In the case of workmen governed by the may provide an additional forum to recover monetary benefit.
It is not suggested that appellant was a workman governed by the .
The High Court was, therefore, in error in holding that the remedy was only by way of an industrial dispute and not by a civil suit.
[337C D] The Court while interpreting and enforcing the relevant gratuity rules will have to bear in mind the concept of gratuity.
The fundamental principle under lying gratuity is that it is a retirement benefit for long service as a provision for old age.
Demands of social security and social justice made it necessary to provide for payment of gratuity.
On the enactment of the a statutory liability was cast on the employer to pay gratuity.
Pension and gratuity which have much in common are well recognised retiral benefits as measures of social security.
It is now well settled that pension is a right and payment of it does not depend upon the discretion of the employer, nor it can be denied at the sweet will or fancy of the employer.
If pension can be recovered through civil suit, there is no justification in treating gratuity on a different footing.
Pension and gratuity in the matter of retiral benefits and for recovering the same must be put on par [339G H; 340A] Burhanpur Tapti Mills Ltd. vs Burhanpur Tapti Mills Mazdoor Sangh; , Deokinandan Prasad vs State of Bihar & Ors.
,[1971] Supp SCR 634, State of Punjab & Anr. vs Iqbal Singh, ; , D.S. Nakara & Ors vs Union of India; , ; referred to.
If the rules for payment of gratuity become incorporated in the Standing orders and thereby acquired the status of the statutory condition of service, an arbitrary denial referable to whim, fancy or sweet will of the employer must be, rejected as arbitrary.
Sec. 4 of the 1946 Act which confers power on the certifying officer or the appellate authority to adjudicate upon the fairness or reasonableness of the provisions would enable this Court to reject that part of Rule 10 which confers absolute discretion on the employer to pay gratuity even if it is earned, at its absolute discretion, as utterly unreasonable, ineffective and unenforceable.
That part of Rule 10 must, therefore, be treated as ineffective and un enforceable.
[340C D] 328 The claim to absolute discretion not to pay gratuity even when it is earned is a hang over of the laissez faire days and utterly inconsistent with the modern notion of fair industrial relations and, therefore, it must be rejected as ineffective and hence unenforceable.
[340H] Western India Match Company Ltd. vs Workmen, ; referred to.
Our Constitution envisages a society governed by rule of law.
Absolute discretion uncontrolled by guidelines which may permit denial of equality before law is the anti thesis of rule of law.
Absolute discretion not judicially reviewable inheres the pernicious tendency to be arbitrary and is, therefore, violative of article 14.
Equality before law and absolute discretion to grant or deny benefit of the law are diametrically opposed to each other and cannot co exist.
Therefore also the conferment of absolute discretion by Rule 10 of the Gratuity Rules to give or deny the benefit of the rules cannot be upheld and must be rejected as unenforceable.
[341A C]
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"Civil Appeal No. 545 of 1975.\nFrom the Judgment and order dated 25.11.1974 of the Madras High Cour(...TRUNCATED) | "The Tamil Nadu Housing Board made Madras State Housing Board Service Regulations in exercise of the(...TRUNCATED) |
"Appeal No. 582 of 1969.\nAppeal from the Judgment and Decree dated the 19th March, 1968 of the Bomb(...TRUNCATED) | "In 1953, defendant 1 executed on behalf of himself and his minor son, defendant 2, a deed of mortga(...TRUNCATED) |
"etition (Criminal) No. 1632 of 1981.\n476 Under article 32 of the Constitution of India.\nS.K Jain (...TRUNCATED) | "The petitioner and his two associates were convicted and sentenced under section 302 read with sect(...TRUNCATED) |
"ins Matters.\nA. Movement by Road: (a) WP.\nNos.2907 2908,3234, 3238 39,3164,3254, 3630 31,3686, 37(...TRUNCATED) | "In exercise of the powers vested under the Essential Commodities Act, 1951, the State Government of(...TRUNCATED) |
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