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1973 DIGILAW 254 (ALL)

India Tobacco Co. v. State of Uttar Pradesh

1973-05-15

H.N.SETH

body1973
JUDGMENT H.N. Seth, J. - Messrs. India Tobacco Co. Ltd. (hereinafter referred to as the employers) have filed the present writ petition praying for the issue of a writ, direction or order in the nature of certiorari, for quashing the award of the Labour Commissioner, U. P. dated 22/25-11-1972, made under clause (4) of the U. P. Workmen's Gratuity Scheme, enforced by the State Government, as per its Notification No. 4268 (ST) XXXVI-1-170 (ST)-71, dated November 19, 1971 issued under Section 3 (b) of the U. P. Industrial Disputes Act, 1947. 2. The facts giving rise to the present writ petition briefly stated are that the petitioner company carries on the business of manufacture and sale of cigarettes and smoking tobacco. One of its factories is situated at Saharanpur. In the year 1962, a settlement was arrived at between the employers and their workmen which was duly registered under Section 6 (b) of the U. P. Industrial Disputes Act. This settlement provided that with effect from 1st January, 1961, all workmen will be retired from the service of the company on 31st December of the year in which they attained the age of 58 years according to the age mentioned in employers records. The settlement further enabled a workman who attained the age of 55 years to retire from service on 31st December, of that year, or on 31st December of the subsequent two years. This settlement was to remain in full force until it was modified or substituted or terminated by another settlement or by an award. The settlement further provided that nothing in it was deemed to affect or limit the right to which the workmen were entitled to under the existing legislation or may become entitled to under legislations by the Central or U. P. Legislature. The employers and their workmen entered into a further settlement on 26th December, 1967. This settlement was also registered as provided in Section 6 (b) of the U. P. Industrial Disputes Act. The new settlement provided that subject to it, all previous memorandums of settlement were to remain in force until a fresh agreement was arrived at and that nothing in it was deemed to affect or limit the rights to which the workmen are entitled to under the existing legislation or may become entitled to under legislations by the Central or the State legislature. The result of these two settlements was that the workmen employed by the petitioners were to retire from service on 31st of December of the year in which they attained the age of 58 years. On 1st of February, 1971, the petitioner issued letters to 45 workmen (including opposite parties Nos. 3 to 42) who were to attain the age of 58 years during the calendar year, 1971, that they would retire from service on 31st December, 1971. However, on November 19, 1971, the State Government, purporting to exercise its power under Section 3 (b) of the U. P. Industrial Disputes Act, issued the Notification No. 4268 ST-XXXVII-I-170 (ST) 71, -introducing a scheme entitled the U. P. Workmen's Gratuity Scheme, (hereinafter referred to as the State Gratuity Scheme). This scheme provided for payment of gratuity to workmen in certain establishments including inter alia, those employed, or who may come to be employed, in any factory as defined in clause (m) of the Factories Act, 1948. It provided for payment of gratuity to workmen on retirement after attaining the age of superannuation. Clause 4 of the Scheme defined the age of superannuation as 60 years. But, by agreement between the employer and the workmen, this age could be extended further. The workmen to whom notices had been issued, took up the stand that under the State Gratuity Scheme, their age of superannuation had been raised to 60 years and they were to continue in service even after 31st December, 1971. In the circumstances, the notices issued to them should be withdrawn. The petitioner informed the workmen that without prejudice to their right, the workmen who had been asked to retire on 31-12-1971 would be permitted to continue in service for a further period of three months i.e., upto 31st March, 1971 on existing terms and conditions of service. Subsequently, the petitioner extended the services of these workmen upto 30th June, 1972. In the mean time, on 18th April, 1972, the State Government in exercise of its power under Section 3 (b) of the U. P. Industrial Disputes Act issued an amendment to the State Gratuity Scheme. Subsequently, the petitioner extended the services of these workmen upto 30th June, 1972. In the mean time, on 18th April, 1972, the State Government in exercise of its power under Section 3 (b) of the U. P. Industrial Disputes Act issued an amendment to the State Gratuity Scheme. According to the amending order, existing clause (4) of the State Gratuity Scheme, which provided that the age of superannuation of a workman would be 60 years was substituted by a new clause laying down that subject to any contract to the contrary between the employer and the work, men, the age of superannuation shall be 60 years. This change in the definition of age of superannuation gave rise to a fresh controversy between the employers and their workmen. According to the employers the settlement arrived at in the years 1962/1967 providing that the workmen were to retire on attaining the age of 58 years, constituted a contract, accordingly, under the amended clause 4 of the State Gratuity Scheme, the workmen were to retire on 31st December of the year in which they attained the age of 58 years. Opposite Parties Nos. 3 to 42, therefore, had no right to continue in service after 30th of June, 1972, the date upto which their services had been extended by agreement between the parties. The workmen, however, claimed that before the introduction of the amendment in the State Gratuity Scheme on 18-4-1972, the workmen had already acquired the right to continue in service upto the age of 60 years as mentioned in various clauses of 1962 and 1967 settlements, the provision in the State Gratuity Scheme, as it stood before its amendment, laying down that the workers will retire from service on attaining the age of 60 years, became a part of contract of service. In the circumstances, even according to clause 4 of the order, as introduced by the amendment order dated 18th April, 1972 the workmen are entitled to continue in service till they attain the age of 60 years, and the stand taken by the employers that they were not entitled to continue in service after April 30, 1972 is not correct. 3. 3. This dispute between the employer and the workmen was referred to the Labour Commissioner under clause (14) of the State Gratuity Scheme, which provided that if any dispute arises regarding the implementation of the order, any party may refer it to the Labour Commissioner who shall, after such enquiry to be conducted either by himself or by any other officer as he thinks fit, decide the same and his decision shall be final and binding on the parties. The dispute was ultimately decided by the Labour Commissioner on 22nd November, 1972. He held that opposite parties Nos. 3 to 42 were entitled to continue in service upto the age of 60 years. Before, however, the Labour Commissioner decided the dispute on 22nd November, 1972 the Central Legislature passed Act No. 39 of 1972, known as Payment of Gratuity Act, 1972 which came into force on 16th of September 1972. The employers accordingly moved the Labour Commissioner, requesting him to recall his award. The Labour Commissioner rejected the request on the ground that he had no jurisdiction to review the award already made by him. 4. The petitioner then filed the present writ petition and challenged the validity of the award dated 22nd November, 1972. 5. Learned counsel for the petitioners urged that after enactment of the Payment of Gratuity Act, 1972, the State Gratuity Scheme stood completely superseded. Accordingly on 22-11-1972 the Labour Commissioner had no jurisdiction to make an order under clause (14) of the State Gratuity Scheme. If at all, the matter could be dealt with only under the Payment of Gratuity Act, 1972. He also contended that the order under Section 3 (b) of the U. P. Industrial Disputes Act enforcing the State Gratuity Scheme and authorising the Labour Commissioner to make an award, was itself invalid as the conditions precedent for exercising the power under that section did not in fact exist. 6. I would first deal with the second ground urged on behalf of the petitioner. In case it is held that the very notification enforcing the State Gratuity Scheme is invalid, the Labour Commissioner would have no, jurisdiction to make a binding award. 7. In the case of State of U.P. v. Basti Sugar Mills Co. Ltd., AIR 1961 SC 420 . In case it is held that the very notification enforcing the State Gratuity Scheme is invalid, the Labour Commissioner would have no, jurisdiction to make a binding award. 7. In the case of State of U.P. v. Basti Sugar Mills Co. Ltd., AIR 1961 SC 420 . it has been held by the Supreme Court that the power under Section 3 (b) of the Industrial Disputes Act, 1947 can be availed of only in an emergency. Clause (b) of Section 3 has apparently been enacted for the purposes of arming the State Government with additional powers to deal with an emergent situation. Further, this power can be exercised only if the State Government is of opinion that it is necessary or expedient so to do for securing public safety or convenience, for the maintenance of public order, supplies or services essential to the life of community or for maintaining employment. It was pleaded in paragraphs 11 to 15 of the petition that the State Government could exercise its power under Section 3 (b) of the U. P. Industrial Disputes Act only in case of great emergency and that too by way of interim or temporary measure. Power under that section could not be exercised for laying down conditions of service permanently or semi permanently. Further, such power could be exercised only for purposes mentioned in that section. The State Gratuity Scheme was introduced in November 1971 and at that time, in relation to the purpose for which the power under Section 3 of the U. P. Act of 1947 could be exercised, there was absolutely no emergency of any kind. The said scheme, which changed the terms of employment of petitioner's workmen, had absolutely no bearing on the purpose required to be achieved by the exercise of power under Section 3 (b) of the Industrial Disputes Act, 1947 viz., securing public safety or convenience, maintenance of public order and supplies or services essential to the life of the community or the maintenance of employment. In the absence of such prerequisite conditions, the State Government had no jurisdiction to enforce the State Gratuity Scheme by means of an order made under Section 3 (b) of the U. P. Industrial Disputes Act. 8. In the absence of such prerequisite conditions, the State Government had no jurisdiction to enforce the State Gratuity Scheme by means of an order made under Section 3 (b) of the U. P. Industrial Disputes Act. 8. When the case was taken up for hearing it was found that on behalf of the State no counter affidavit had been filed and the assertion made in the writ petition, that there was in fact no emergency of any kind whatsoever in relation to and for the purposes for which power under Section 3 of the Industrial Disputes Act could be exercised, remained uncontroverted. However, considering the nature of controversy involved in the case, I adjourned its hearing and gave an opportunity to the State Government to file a counter-affidavit indicating the emergency and the precise circumstances in which the order enforcing the State Gratuity Scheme was passed so that this Court may be able to find whether the State Government was in fact satisfied that there was an emergency and that the conditions precedent justifying enforcement of the State Gratuity Scheme under Section 3 (b) of the U. P. Industrial Disputes Act existed. Subsequently on 24-3-1972 Sri J. B. Pandey Regional Conciliation Officer, Allahabad filed a counter-affidavit on behalf of the State. In paragraph 9 of the-affidavit he mentioned that the circumstances and the conditions precedent to the issuance of the Gratuity Scheme of the State Government under Section 3 (b) have been recited in the scheme itself. Accordingly, the - Government was satisfied that those conditions actually existed and as observed by the Supreme Court in Swadeshi Cotton Mills case, AIR 1961 SC 1381 , it is for the petitioner to show that these conditions did not in fact exist. The allegations in paragraph 9 of the counter-affidavit have been sworn on legal advice. Being the Regional Conciliation Officer it is unlikely that Sri Pandey would know whether or not the State Government was in fact satisfied that the conditions precedent for making an order under Section 3 (b) of the U. P. Industrial Disputes Act actually existed. The allegations in paragraph 9 of the counter-affidavit have been sworn on legal advice. Being the Regional Conciliation Officer it is unlikely that Sri Pandey would know whether or not the State Government was in fact satisfied that the conditions precedent for making an order under Section 3 (b) of the U. P. Industrial Disputes Act actually existed. The stand taken by the respondents appears to be that as conditions precedent for making the order under Section 3 (b) have been recited therein, it is for the petitioner to show that these conditions did not exist, and, if it fails to do so, it will not be possible for the court to interfere with the impugned order. In , the circumstances, there is no obligation on the state to place any material or evidence before the Court in this connection. 9. It has, therefore, become necessary to analyse as to what actually has been laid down by the Supreme Court in Swadeshi Cotton Mills case, reported in AIR 1961 SC 1381 . In this connection it will be useful to refer to the following observations appearing in paragraph 11 of that judgment. "Whether orders are executive or in the nature of subordinate legislation, their validity depends on certain conditions precedent being satisfied. If these conditions precedent are not recited on the face of the order and the fulfilment of the condition precedent can be established to the satisfaction of the court in the case of executive orders we do not see why that cannot be made good in the same way in the case of orders in the nature of subordinate legislation. We cannot accept the extreme argument of Shri Aggarwala that the mere fact that the order has been passed is sufficient to raise the presumption that conditions precedent have been satisfied, even though there is no recital in the order to that effect. Such a presumption in our opinion can only be raised when there is a recital in the order to that effect. In the absence of such recital if the order is challenged on the ground that in fact there was no satisfaction the authority passing the order will have to satisfy the Court by other means that the conditions precedent were satisfied before the order was passed. In the absence of such recital if the order is challenged on the ground that in fact there was no satisfaction the authority passing the order will have to satisfy the Court by other means that the conditions precedent were satisfied before the order was passed. We are equally not impressed by Shri Pathak's argument that if the recital is not there the public or courts and tribunals will not know that the order was validly passed and therefore it is not necessary that there must be a recital on the face of the order in such a case before it can be held to be legal. The presumption as to the regularity of public acts would apply in such a case; but as soon as the order is challenged and it is said that it was passed without the conditions precedent being satisfied the burden would be on the authority to satisfy by other means (in the absence of recital in the order itself) that the conditions precedent had been complied with. The difference between a case where a general order contains a recital on the face of it and one where it does not contain such a recital is that in the latter case the burden is thrown on the authority making the order to satisfy the Court by other means that the conditions precedent were fulfilled, but in the former case the Court will presume the regularity of the order including the fulfilment of the conditions precedent, and then it will be for the party challenging the legality of the order to show that the recital was not correct and that the conditions precedent were not in fact complied with by the authority.......... .........Our conclusion therefore is that where certain conditions precedent have to be satisfied before a subordinate authority can pass an order (be it executive or of the character of subordinate legislation), it is not necessary that the satisfaction of those conditions must be recited in the order itself, unless the statute requires it, though as we have already remarked, it is most desirable that it should be so, for in that case the presumption that the conditions were satisfied would immediately arise and burden would be thrown on the person challenging the fact of satisfaction to show that what is recited is not correct. But even where the recital is not there on the face of the order, the order will not become illegal ab initio and only a further burden is thrown on the authority passing the order to satisfy the Court by other means that the conditions precedent were complied with...." This shows that in this case, the Supreme Court held that where the conditions precedent for making an order are recited in the order, Courts can act on the presumption that the official acts are regularly done and that the recital in the order has also been made in a regular and proper manner. The judgment also indicates that normally courts should act upon such a presumption and it should take a contrary view only when the person impugning the validity of the order produces evidence to show that the State Government was in fact not satisfied about the existence of those conditions precedent. In my opinion, this case does not lay down that in all cases, irrespective of its special circumstances, courts are bound to act upon such a presumption unless the petitioner is able to rebut the same by producing some definite evidence. There is no law which compels courts to such a presumption in all cases without considering their special circumstances. 10. I will, therefore, proceed to examine whether in the circumstances of the case, in view of the recitals in the State Gratuity Scheme, it should be presumed that before enforcing the scheme, the State Government was in fact satisfied about the existence of conditions precedent for making an order under Section 3 (b) of the U.P. Industrial Disputes Act. 11. I will, therefore, proceed to examine whether in the circumstances of the case, in view of the recitals in the State Gratuity Scheme, it should be presumed that before enforcing the scheme, the State Government was in fact satisfied about the existence of conditions precedent for making an order under Section 3 (b) of the U.P. Industrial Disputes Act. 11. The reason for enforcing the State Gratuity Scheme as mentioned in the order made under Section 3 (b) runs thus : "Whereas by their notification No. 4387/XXXVI-A-201 (STO-70, dated September 1, 1970) the Governor of Uttar Pradesh constituted the State Labour Reorganisation Commission for making recommendation on (i) streamlining and re-orientation of the labour organisation of the State so as to make it more effective and efficient in discharge of its responsibilities; (ii) ways and means for improving industrial harmony, productivity and production and for motivating labour to fulfil the said objectives; and (iii) all other matters as may be referred to it by the State Government from time to time and whereas, the said commission has in its first report made a unanimous recommendation on certain matters including payment of gratuity to workmen; and whereas, in the opinion of the State Government, it is necessary for securing the maintenance of public order and supplies and services essential to the life of the community and for maintaining employment to implement the unanimous recommendations of the Com, mission in respect of payment of gratuity. Now wherefore, in exercise of the powers under Section 3 (h) of the U. P. Industrial Disputes Act, 1947 (U. P. Act No. XXVIII of 1947) the Governor is pleased to make' the following order and to direct with reference to Section 19 of the said Act that notice of this order shall be given by publication in the ,official Gazette." This shows that the impugned order was made in order to achieve twofold object viz. -(1) to give effect to the unanimous recommendation of the State Labour Reorganisation Commission with regard to payment of gratuity and (2) for securing the maintenance of public order and supplies and services essential to the life of the community and for maintaining employment. So far as the first object is concerned, it is clearly not an object for achieving which an order under Section 3 (b) of the U. P. Industrial Disputes Act can be made. So far as the first object is concerned, it is clearly not an object for achieving which an order under Section 3 (b) of the U. P. Industrial Disputes Act can be made. A perusal of the impugned order, however, discloses that all the provisions contained therein relate to the payment of gratuity. In the circumstances it can safely be presumed that these provisions have been made in order to implement and to give effect to the unanimous recommendation of the Labour Reorganisation Commission. There is no provision in the order which, on the face of it, indicates that it is directed towards maintenance of public order or supplies or services essential to the life of the community and for maintaining employment. It is also significant to note that the gratuity scheme contained in the order has been made applicable to all commercial establishments or shops as defined in clauses 4 and 16 respectively of Section 2 of the U. P. Dukan, Vanijya Adhishthan Adhiniyam, 1962 (U. P. Act XXVI of 1962) where five or more persons are employed and are situated within the limits of Mahapalikas of Kanpur, Agra, Allahabad, Varanasi, Lucknow and the Municipalities of Gorakhpur, Meerut and Bareilly. It also applies to any factory as defined in clause (m) of Section 2 of the Factories Act 1948. Now such establishments or factories may or may not be dealing with the supplies which are essential to the life of the community. There is therefore ample reason to suspect that the recital in the order that the State Government is of opinion that it is necessary to do so for securing maintenance of public order and supplies and services essential to the life of the community and for maintaining employment, has been made mechanically, without the State Government actually applying its mind to the fact whether such conditions existed or not. In the circumstances, I called upon the State Government either to file a proper affidavit or produce material before the Court for satisfying it that the recitals in the order are not mere mechanical recitals, and that the State Government was actually so satisfied. In the circumstances, I called upon the State Government either to file a proper affidavit or produce material before the Court for satisfying it that the recitals in the order are not mere mechanical recitals, and that the State Government was actually so satisfied. The State Government, instead of filing an affidavit of the person who was expected to be acquainted with the relevant facts in this connection, or placing relevant material before this Court, got in affidavit sworn by the Regional Conciliation Officer, who merely took up the stand that in the circumstances the State Government was entitled to rely upon the presumption of regularity of official acts and of U. P. (Seth J.) Lab. I. C. it was not necessary for it to produce any evidence or material before the Court showing that there was in fact an emergency and that the conditions precedent for making the order actually ,existed. If the State Government was really satisfied that there was an emergency and it was necessary to make the order for securing the maintenance of public order and supplies and services essential to the life of the community etc. as stated therein, there was absolutely no difficulty in some officer, who was acquainted with the files of the State Government, swearing such an affidavit on the basis of perusal of relevant records or in placing the relevant material before the Court. In the special circumstances of this case, I feel that this is not a fit case where the Court should act upon the presumption that the recitals contained in the impugned order have factual foundation. Moreover, the fact that in spite of opportunity being given to the State Government it declined to adduce any evidence regarding facts which were in its special knowledge leads to an inference that the recitals in the order were made mechanically with the object of justifying the same under Section 3 (b) of the U. P. Industrial Disputes Act, although the conditions precedent for making an order under that section did not actually exist. 12. The view taken by me finds sup port from a Division Bench decision of this Court in State of U. P. v. Prem Spinning and Weaving Mills Co. reported in 1973 All LJ 65. 12. The view taken by me finds sup port from a Division Bench decision of this Court in State of U. P. v. Prem Spinning and Weaving Mills Co. reported in 1973 All LJ 65. Learned counsel appearing for the workmen relied upon a Single Judge decision of this Court in AIR 1967 All 36 , (Rashtriya Chini Mill Mazdoor Union v. State of U.P.) in which on the basis of the recitals made in the impugned order, the learned Single Judge held that there was a presumption that those recitals were correct and that they had neither been challenged nor their correctness dispelled by the petitioner. The learned Judge did not lay down that in all such cases irrespective of these special circumstances the Court was bound to raise such presumptions. I have already indicated the reasons why in the special circumstances of this case 1 do not think that it is a fit case in which this Court should act upon the normal presumption about regularity of official acts. 13. I am, accordingly, of opinion that the order dated 17-11-1971 enforcing the State Gratuity Scheme has not been shown to have been validly made under Section 3 (b) of the U. P. Industrial Disputes Act, and, there fore, the Labour Commissioner did not acquire any jurisdiction to adjudicate upon the dispute raised in this case under Cl. (14) thereof. The award dated 22nd November, 1972 therefore deserves to be quashed. While quashing the order, I express no opinion on the merits of the controversy raised by the parties which can be resolved in appropriate proceedings. In this view of the matter it is not necessary for me to deal with other arguments raised before me. The petition accordingly succeeds and is allowed. The order dated 22-11-1972 is quashed. Parties are directed to bear their own costs. The stay order dated 14-12-1972 is vacated.