Rohtas Industries Staff Union v. State of BiharAIR 1963 Pat. 170

Case Summary

Full Case Details

RAMASWAMI, C.J. – In Miscellaneous Judicial Case No. 498 of 1959, petitioner No. 1 is a
registered trade union, called the Rohtas Industries Mazdoor Sangh. Petitioners Nos. 2 and 3
are employees of respondent No. 2, the Rohtas Industries Limited, which have many units of
production at Dalmianagar, namely, cement, paper, sugar, etc. etc., and a large number of
workers are employed therein. For disputes regarding non-payment of bonus and nonimplementation of Shree Jee Jee Bhoy’s award, there was a strike notice served by petitioner
No. 1 on respondent No. 2. The strike was started in the factories of the Rohtas Industries
Limited on the 3rd September, 1957, and it was called off on the 3rd October, 1957, on the
basis of an agreement between the management and the workers dated the 2nd October, 1957.
By this agreement the parties agreed to refer certain matters in dispute to arbitration.
Under Section 10-A of the Industrial Disputes Act the Government of Bihar published
the arbitration agreement in the Bihar Gazette. The arbitration agreement is to the
following effect:
“Agreement under Section 10-A of the Industrial Disputes Act, 1947, between
Rohtas Industries Limited and its workmen.
Representing Employers – Rohtas Industries, Ltd., Dalmianagar.
Representing Workmen – (1) Rohtas Industries Mazdoor Sangh, Dalimianagar;
(2) Rohtas Industries Staff Union, Dalmianagar;
(3) Dalmianagar Staff Employees’ Union, Dalmianagar.
(4) Dalmianagar Mazdoor Seva Sangh, Dalmianagar.
It is hereby agreed between the parties to refer the following industrial disputes to the
arbitration of Shri J.N. Mazumdar, Ex. Judge, Calcutta High Court, and Ex. Chairman,
Labour Appellate Tribunal of India, and Shri R.C. Mitter, Ex. Judge, Calcutta High Court
and Ex. Chairman, Labour Appellate Tribunal of India:
(i) Specific matters in dispute – Issues arising out of paragraph 7 of the
Agreement dated 2nd October, 1957, reproduced below:
“The employees claim for wages and salaries for the period of strike and
the Company’s claim for compensation for losses due to strike shall be
submitted for arbitration of Shri J.N. Mazumdar and Shri R.C. Mitter, Ex.
High Court Judges and Ex. Members of the Labour Appellate Tribunal of
India as Joint Arbitrators and their decisions on the two questions shall be
final and binding on all the parties.”
(ii) Details of the parties to the dispute – The Rohtas Industries Ltd.,
Dalmianagar and their workmen.
(iii) Name of the Unions representing the workmen – (1) Rohtas Industries
Mazdoor Sangh, Dalmianagar, (2) Rohtas Industries Staff Union, Dalmianagar, (3)
Dalmianagar Staff Employees’ Union, Dalmianagar, and (4) Dalmianagar Mazdoor
Seva Sangh, Dalmianagar.
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(iv) Total number of workmen employed in Rohtas Industries Limited – About
5,500.
(v) Estimated number of workmen likely to be affected by the dispute – About
5,500.”
According to clause 7 of the agreement, the claim of the workers for wages and salaries
for the period of the strike and the claim of the Company for compensation for loss of
production due to strike were to be submitted for arbitration of Shri J.N. Mazumdar and Sri
R.C. Mitter, former High Court Judges and Ex. Members of the Labour Appellate Tribunal of
India, as joint arbitrators. On the 20th April, 1959, the arbitrators gave an award and sent the
same for publication to the Government of Bihar. In this award the arbitrators decided all the
issues against the trade unions and held that compensation should be paid by the workers who
had gone on strike to the Rohtas Industries Limited to the extent of Rs. 6,90,000/- and to the
Ashoka Cement Works Limited to the extent of Rs. 80,000/-. The arbitrators also decided
that the cost of arbitration should be divided equally between the employers and the trade
unions concerned.
The petitioners have obtained a rule from the High Court asking the respondents to show
cause why the award of the arbitrators dated the 20th April, 1959, should not be quashed by a
writ in the nature of certiorari under Article 226 of the Constitution. Cause has been shown
by the Additional solicitor General of India on behalf of respondent No. 2, to whom notice of
the rule was ordered to be given. On behalf of respondent No. 1, the State of Bihar, the
Additional Government Pleader, supported the contention of the petitioners that the award of
the arbitrators is ultra vires and illegal in so far as it directs compensation to be paid by the
workmen going on strike to the management of the company for loss of production and
business due to the strike.
(2) In Miscellaneous Judicial Case No. 475 of 1959, petitioner No. 1 is a registered trade
union, called the Rohtas Industries Staff Union, and respondents Nos. 2, 3, 3, 5 and 6 are the
Rohtas Industries Limited, Ashoka Cement Limited, Sri Krishna Gyanoday Sugar Limited,
Ashoka Marketing Limited and Bharat Collieries Limited. The material facts in this case are
identical to those in Miscellaneous Judicial Case No. 498 of 1959, and the question of law
presented for determination in this case is of the same character.
(3) It was submitted on behalf of the petitioners that compensation by the workmen to the
employer has no direct connection with the employment or non-employment or the condition
of employment of any workman and so does not come within the definition of Section 2(k) of
the Industrial Disputes Act.
The opposite view point was presented by the Additional Solicitor General and it was
contended that the definition of Section 2(k) of the Industrial Disputes Act was wide enough
to cover the question of compensation to be paid to the employer by the workmen for the loss
caused to business by the launching of the strike. Reference was made by the Additional
Solicitor General to the decision of the Federal Court in Western India Automobiles
Association v. Industrial Tribunal, Bombay [AIR 1949 FC 111], where it was held by the
Federal Court that the question of reinstatement of a workman is covered by the definition of
“industrial dispute” in Section 2(k) of the Industrial Disputes Act. I consider that there is
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much force in the contention put forward on behalf of the petitioners that the question of
compensation payable by the workmen to the employer for the loss caused by a strike does
not come within the purview of Section 10-A of the Industrial Disputes Act, and such a claim
of the employer cannot fall within the definition of “industrial dispute” under Section 2(k) of
the statute.
It should be noticed that Section 25-C of Chapter VA provides for compensation to
workmen who are laid-off. Section 25-FF similarly provides for compensation to workmen in
case of transfer of understandings. Section 25-FFF in the same manner provides for
compensation in case of closing down of undertakings. There is no similar provision in the
Act for compensation payable to employers by workmen for interference with the business. It
is true that the language of section 2(k) is wide, but it is a well established canon of
construction that the language of any section must be interpreted in the setting and in the
context of other sections of the Act. In other words, the meaning of the section must be
subject to the qualifying effect of subjectae materies. I do not propose, however, to express
any concluded opinion on this question in the present case. I shall proceed on the assumption
that the claim of the employers for compensation from the workmen falls within the scope of
Section 2(k) of the Industrial Disputes Act, and the reference to arbitration under Section 10-
A of the Industrial Disputes Act of this question is intra vires.
(4) I shall now consider the main argument addressed on behalf of the petitioners that the
award of the Arbitrators is illegal and ultra vires because they committed a mistake of law
apparent on the face of the record. It was contended by learned counsel on behalf of the
petitioners that the arbitrators were erroneous in holding that the workers had committed the
tort of conspiracy and were accordingly liable for paying compensation to the Companies
concerned. It was also submitted that the arbitrators had committed an error of law in holding
that the workers were not protected by the immunity granted under Section 18 of the Trade
Unions Act. It was submitted on behalf of the petitioners that the award of the arbitrators so
far as the question of compensation is concerned is vitiated by error of law and must be
quashed by grant of a writ in the nature of certiorari under Art. 226 of the Constitution.
(5) The law with regard to the tort of conspiracy is now well established. Conspiracy as a
tort must arise from a combination of two or more persons to do an act. It would be
actionable if the real purpose of the combination is the inflicting of damage on A, as
distinguished from serving the bona fide and legitimate interests of those who so combine and
there is a resulting damage to A. In the leading case of Sorrell v. Smith [1925 AC 700], Lord
Cave, L.C. remarked as follows:
I deduce as material for the decision of the present case two propositions of law
which may be stated as follows: (1) A combination of two or more persons wilfully
to injure a man in his trade is unlawful and, if it results in damage to him, is
actionable, (2) If the real purpose of the combination is, not to injure another, but to
forward or defend the trade of those who enter into it, then no wrong is committed
and no action will lie, although damage to another ensues. The distinction between
the two classes of case is sometimes expressed by saying that in cases of the former
class there is not, while in cases of the latter class there is, just cause or excuse for the
action taken.
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In a subsequent case, Crofter Hand-woven, Harris Tweed Co. v. Veith [1942-1 All ER
142] the House of Lords applied the principle of the Mugul case [Mogul S.S. Co. v. Mc
Gregor Gov. and Co., 1892 AC 25] to labour relations. It was observed by Viscount Simon,
L.C. in this case as follows:
(T)he predominant object of the respondents in getting the embargo imposed was
to benefit their trade union members by preventing under-cutting and unregulated
competition, and so helping to secure the economic stability of the island industry.
The result they aimed at achieving was to create a better basis for collective
bargaining, and thus directly to improve wage prospects. A combination with such
an object is not unlawful, because the object is the legitimate promotion of the
interests of the combiners…
In the course of his judgment in the same case, Lord Wright observed as follows:
It cannot be merely that the appellants’ right to freedom in conducting their trade
has been interfered with. That right is not absolute or unconditional. It is only a
particular aspect of the citizen’s right to personal freedom, and, like other aspects of
that right, is qualified by various legal limitations, either by statute or by common
law. Such limitations are inevitable in organized societies, where the rights of
individuals may clash. In commercial affairs, each trader’s rights are qualified by the
right of others to compete. Where the rights of labour are concerned, the rights of the
employer are conditioned by the right of the men to give or withhold their services.
The right of workmen to strike is an essential element in the principle of collective
bargaining.
(6) In the case of a “mixed motive” or a “mixed purpose” for the conspiracy, the test is
what is the dominant motive or the dominant purpose of the conspiracy. The test to be applied
in a case of this description is – was the dominant motive of the combiners to benefit the
funds of the Union or was the dominant motive to cause the injury to the employer? The test
is not what is the natural result to the employers of such combined action or what is the
resulting damage to the employers, but what is in truth the object in the minds of the
workmen when they acted as they did. It is well established that if there is more than one
purpose actuating a combination, the liability must depend on ascertaining what is the
predominant purpose is.
The matter is clearly put by Viscount Simon, L.C. in 1942-1 All ER 142 as follows:
The test is not what is the natural result to the plaintiff of such combined action
or what is the resulting damage which the defendants realise, or should realise, will
follow, but what is in truth the object in the minds of the combiners when they acted
as they did. It is not consequence that matters, but purpose. The relevant
conjunction is not, ‘so that,’ but ‘in order that.’ Next, it is to be borne in mind that
there may be cases where the combination has more than one ‘object’ or ‘purpose’.
The combiners may feel that they are killing two birds with one stone, and, even
though their main purpose may be to protect their own legitimate interests
notwithstanding that this involves damage to the plaintiffs, they may also find a
further inducement to do what they are doing by feeling that it serves the plaintiffs
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right. The analysis of human impulses soon leads us into the quagmire of mixed
motives, and, even if we avoid the words ‘motive’, there may be more than a single
purpose or object. It is enough to say that, if there is more than one purpose actuating
a combination, liability must depend on ascertaining the predominant purpose. If the
predominant purpose is to damage another person and damage results, that is tortious
conspiracy. If the predominant purpose is the lawful protection or promotion of any
lawful interest of the combiners, it is not a tortious conspiracy, even though it causes
damage to another person.
(7) In the present case the arbitrators have failed to apply this principle in adjudicating the
liability of the workers to pay compensation. It is conceded by the arbitrators that the workers
commenced the strike because their demands for payment of bonus had not been complied
with. It is also stated by the arbitrators in the award that the reason for the strike was the nonimplementation of Shri Jee Jee Bhoy’s award with regard to the wages of casual workmen
and also non-implementation of the settlement dated 2nd May, 1957. But the arbitrators have
said that the strike was resorted to by each of the Unions “for ulterior objects of their own.”
The arbitrators have not found what were the “ulterior objects” for which the Unions entered
into a strike. Even assuming that there were ulterior objects impelling the Unions to enter
into a strike, it was the duty of the arbitrators to go into the question as to what was the
dominant purpose of the strike and whether the dominant purpose was not promotion of the
legitimate interest of the Trade Unions for better wage conditions for the workers concerned.
In failing to apply the principle of law laid down by the House of Lords in 1942-1 All ER 42,
the arbitrators have misdirected themselves in law, and the award of compensation to the
Companies granted by the arbitrators must be quashed on this ground.
(8) I shall then proceed to consider the argument of Counsel for the petitioners that the
arbitrators have committed an error of law in holding that the workers were not protected by
Section 18(1) of the Trade Union Act, which is to the following effect:
It is manifest that the question whether the strike was legal or illegal under
Section 24(1) of the Industrial Disputes Act has no bearing on the question of
immunity furnished by Section 18 of the Trade Unions Act.
The view I have expressed is borne out by a comparison of the English law on this point.
S. 4 of the Trade Disputes Act, 1906, provides that no action for a tort of any kind shall lie
against a trade union so as to charge the union funds. It is also provided by Section 3 of the
Act that
An act done by a person in contemplation or furtherance of a trade dispute shall
not be actionable on the ground only that it induces some other person to break a
contract of employment or that it is an interference with the trade, business, or
employment of some other person, or with the right of some other person to dispose
of his capital or his labour as he will.
With regard to the interpretation of S. 3 of the Trade Disputes Act it was held by the
Court of Appeal in Dallimore v. Williams and Jesson [(1914) 30 TLR 432] that if there is an
existing trade dispute the act need not be done solely or even honestly in contemplation or
furtherance thereof to obtain the protection of that section. It was further held in Fowler v.
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Kibble [(1922) 1 Ch 487] that an act is not deprived of the protection of S. 3 of the Trade
Disputes Act because it is punishable under S. 7 of the Conspiracy and Protection of Property
Act, 1875. It is manifest in the present case that the striking workmen are not prevented from
taking recourse to the protection of S. 18 of the Trade Unions Act mainly because the strike
was illegal under S. 24(1) of the Industrial Disputes Act. It was still the duty of the arbitrators
to find whether the strike was undertaken by the workmen in furtherance of a trade dispute
within the meaning of S. 18 of the Trade Unions Act.
It was pointed out by the Government Advocate on behalf of the respondents that there
was a finding of the arbitrators in paragraphs 21 and 27(c) of the award that the strike was not
resorted to in furtherance of a trade dispute. But this finding is vitiated in law because the
arbitrators do not say upon what evidence this finding is based. As I have already said, the
arbitrators have said in their award that the strike was resorted to because the demand for
payment of bonus was not complied with and also because there was non-implementation of
Shri Jee Jee Bhoy’s award relating to wages of casual workmen. It is true that in paragraph
21 of the award the arbitrators have said that the Unions have resorted to a strike with ulterior
objects of their own. But the arbitrators have not mentioned anywhere as to what these
ulterior objects were. The arbitrators have not also analysed the question as to whether the
predominant purpose of the workmen in resorting to the strike was not the furtherance of a
trade dispute. As I have already pointed out, the arbitrators have misdirected themselves in
law in holding that the workmen cannot claim immunity under S. 18 of the Trade Unions Act
because the strike is illegal under S. 24(1) of the Industrial Disputes Act. I consider that the
award of the arbitrators regarding payment of compensation to the employers is vitiated by
this fundamental mistake of law.
(9) On behalf of the petitioners learned Counsel submitted that the Companies had no
right of civil action for damages against the workers who had taken part in an illegal strike. It
was submitted that the only remedy open to the Companies was criminal prosecution under S.
26(1) of the Industrial Disputes Act, which is in the following terms:

26. (1) Any workman who commences, continues or otherwise acts in
    furtherance of, a strike which is illegal under this Act, shall be punishable with
    imprisonment for a term which may extend to one month, or with fine which may
    extend to fifty rupees, or both.
    The submission of the learned counsel was that special penalty has been attached to the
    breach of Ss. 23 and 24 of the Industrial Disputes Act, and that remedy is exclusive and the
    companies have no civil remedy in addition to the remedy expressly provided by the statute.
    The opposite view point was put forward on behalf of the respondent-Companies and it
    was contended that apart from the express penalty provided under S. 26(1) of the Industrial
    Disputes Act the Companies had a right to civil action for breach of Ss. 23 and 24 of the Act.
    The question raised depends upon the intention of the Legislature in the enactment of the
    Industrial Disputes Act. Was it intended to make the duty imposed upon the employees and
    the employers by Ss. 23 and 24 of the Act a duty owed to the individuals aggrieved, or was it
    intended to be a public duty only?
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    In the approach to this question it is necessary to have regard to certain principles which
    afford guidance in ascertaining the legislative intent. For example, if a statutory duty is
    prescribed but no remedy by way of penalty or otherwise for its breach is imposed, it can be
    assumed that a right of civil action accrues to the person who is damnified by the breach, for,
    if it were not so, the statute would be wholly ineffective. But “where an Act creates an
    obligation, and enforces the performance in a specified manner, we take it to be a general rule
    that performance cannot be enforced in any other manner” (Lord Tenterdoan, C.J. in Doe D.
    Rochester v. Bridges [(1831) 1 B and Ad. 847, 859]. This passage was cited with approval
    by the Earl of Halsbury, L.C. in Pasmore v. Oswaldtwistle Urban Council [1898 AC 387,
    394]. But this general rule is subject to exceptions. It may be that, though a specific remedy
    is provided by the Act yet the person injured has a personal right of action in addition. That
    depends on the scope of language of the particular statute.
    (12) In the application of this principle, it is necessary to consider the scope and object of
    the Industrial Disputes Act and to ascertain for whose benefit the protection of Sections 22
    and 23 are intended. These sections undoubtedly imposed a duty on the employees, but the
    important question is to whom was the duty owed? Was it intended by the framers of the Act
    to make the duty one which was owed to the employers, or was it a duty owed to the public?
    The preamble of the Act stated:
    It is expedient to make provision for the investigation and settlement of industrial
    disputes, and for certain other purposes.
    There is nothing in the title or preamble of this Act to suggest that it is a charter for the
    employers or the employees or that it is enacted solely for the benefit of any particular class
    of employers or employees. On the contrary, the preamble suggests that the object of the Act
    is the proper adjustment of relations between capital and labour, preservation of law and
    order, and the increase of industrial production.
    (14) Upon the consideration of the various provisions of the Act it is manifest that the
    overriding purpose of the Act is the benefit of the community and not the benefit of the
    employees or the employers. It is true that S. 24 imposes a statutory duty on the employees
    not to commence or declare an illegal strike. But it is manifest that if there is a breach of this
    statutory duty on the part of the employees, the employer has no right of Civil action against
    the employees in default apart from the statutory penalty provided by Section 26(1).
    Similarly, if the employer declares an illegal lock-out, there is a breach of the statutory
    obligation created by S. 24, but the employees have no right of civil action. The exclusive
    remedy open to them is criminal prosecution under Section 26(2) of the Act. For these
    reasons I hold that the duties imposed by Ss. 22, 23 and 24 of the Act are statutory duties
    owed by the employees not to the employers concerned but duties owed to the public which
    can be solely enforced by criminal prosecution under S. 26(1) of the Act. It follows,
    therefore, that the employers have no right of civil action for damages against the employees
    participating in an illegal strike within the meaning of S. 24(1) of the Industrial Disputes Act.
    (18) For these reasons I hold that the award of the arbitrators in all the five references
    under Section 10-A of the Industrial Disputes Act must be held to be ultra vires and illegal so
    far as the arbitrators have granted compensation to the employees by the workmen
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    participating in the strike for the losses due to the strike. In my opinion the petitioners are
    entitled to grant of a writ in the nature of certiorari under Article 226 of the Constitution for
    quashing the award of the arbitrators in all the five references so far as they granted
    compensation to the employers by the workmen concerned for the losses due to the strike.
    (19) I would accordingly allow these applications, but I do not propose to make any order
    as to costs.