# BASTI SUGAR MILLS CO. LTD v. STATE OF U.P. & ANR

- **Citation:** [1979] 1 S.C.R. 590
- **Court:** Supreme Court of India
- **Decided:** 1978-09-11
- **Bench:** V. R. Krishna Iyer, D. A. Desai
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/basti-sugar-mills-co-ltd-v-state-of-u-p-anr-7599
- **Pages:** 19

## Headnote

Payment of Bonus A.ct 1965-Sec. 34-U.P. Industrial Disputes Act, 1947
-s. 3(b), 3(c) Trade Unions A.ct 1926 (S. 211)-Wlietlier bonus can be paid
under order passed under. s. 3 of U.P. I.D. Act-Whether appointment of a
Tripartite Committee amounts to agreement within meaning of s. 34 of Bonus
Act-Whether an association of employers can bind individual tniployer.
C
The appellant runs two Sugar Factories at two different places. There
are about 71 such factories in U.P. The economy of U.P. in large measure,
depends on the sugar industry. Moreover, sugar is an essential commodity.
Thus, these factories and the asmy of workers employed therein fall within
the strategic sector of the State economy.
Section 3 of the U.P. lndus!rial
Disputes Act, 1947 provides that if in the opinion of the State Govt., it is
necessary or e.xpedient so to do for securing the public safety or convenience
D
or the maintenance of public order or supplies and services essential to the
life of the community or for maintaining employn1ent it m:.i.y by general or
special order ma-ke provision for prohibiting strikes lock~outs and for ap-point·
ing committees representative both of employers and ·workmen for securing:
amity and good relations between the en1ployer and the workmen and for
settling industrial disputes by conciliation.
The Payment of Bonu!i Act, 1965
lays down what bonus is payable to the \Vorkmen.
Using the power under
E
S. 3(c) of the 1947 Act and based oo the suggestion of the State Labour
Conference (Sugar), the State Govt appointed a tripartite committee in Octo·
ber 1968 consisting of 3 nominees of the Indian Sugar Mills Association arid
their representatives of the workmen, the Labour Commissioner
being
tile
Chairman of the Committee. The notificatioo under s. 3 (b) who issued with
a view to consider and make recommendations to Government on 1he question
of grant of bonus for 1967-68 by the Vacuum Pan S\Jgar Factories of the
F
State on the basis of the Payment of Bon11c; Act 1965, subject to such modifications as may be mutually:. agreed upon. The Association is a Trade Union
registered under the Trade Unions Act, 1926.
Its functions are indicated in
lhe definition of 'trade union' in Section 2(h) of that Act, and include regula ..
tion of relations between the workmen and en1ployers. Thus, the Association
was within its competence to nominate three representa·tives to sit on the
• Committee to regulate the relations between the Me1nber-employees and the
· G
workmen employed.
The ilPpellant is a Member of the said Association.
H
The Committee held several sittings and at some stages, the appeUant or
his representative did participate directly or indirectly in the deliberations. The
workers' representatives actua11y accepted the formula put
forward
by
the
President of the Management's Association.
On receipt of the recommendation under Section 3(c), the Govt. issued an order under s. 3(b) implementing
those rec9mmendations. Although Section 3(b) does not depend for coming
into play upon any· report under s. 3 ( c), the Govt. constituted the Committee
under ~- 3(c) before taking a~~ step under s. 3(b) as n measure to ensure
the fairne8s to the concerned parties.
The appellant filed a writ petition in
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BAST! SUGAR MILLS V. U. P. STATE
591
the High Court.
The learned single Judge dismissed the writ petition taking
a view that an agreement which is recognised by s. 34 of the Bonus Act,
existed i11 this case and, therefore, the order which merely gave effect to that
agreement was not bad in law. On appeal the two Judges of the Bench dis~
agreed and the case went before the third learned Judge of the High Court
who upheld the order of the learned single Judge on the ground that there
was an agreement under s. 34 of the Bonus Act.
The ~ppellant contended :-
1. The State Govt. cannot a.ct in the area of bonus
without breach
of
~e embargo in s. 34 of the Bonus Act, and, therefore, the impugned notification must fail for want of power.
2. S.nce

## Text

_Characters 0–39,829 of 50,287. This is a partial read: ask again with offset=39829 for what follows._

A
B
590
BASTI SUGAR MILLS CO. LTD.
v.
STATE OF U.P. & ANR.
September 11, 1978
[V. R. KRISHNA IYER AND D. A. DESAI, JJ.]
Payment of Bonus A.ct 1965-Sec. 34-U.P. Industrial Disputes Act, 1947
-s. 3(b), 3(c) Trade Unions A.ct 1926 (S. 211)-Wlietlier bonus can be paid
under order passed under. s. 3 of U.P. I.D. Act-Whether appointment of a
Tripartite Committee amounts to agreement within meaning of s. 34 of Bonus
Act-Whether an association of employers can bind individual tniployer.
C
The appellant runs two Sugar Factories at two different places. There
are about 71 such factories in U.P. The economy of U.P. in large measure,
depends on the sugar industry. Moreover, sugar is an essential commodity.
Thus, these factories and the asmy of workers employed therein fall within
the strategic sector of the State economy.
Section 3 of the U.P. lndus!rial
Disputes Act, 1947 provides that if in the opinion of the State Govt., it is
necessary or e.xpedient so to do for securing the public safety or convenience
D
or the maintenance of public order or supplies and services essential to the
life of the community or for maintaining employn1ent it m:.i.y by general or
special order ma-ke provision for prohibiting strikes lock~outs and for ap-point·
ing committees representative both of employers and ·workmen for securing:
amity and good relations between the en1ployer and the workmen and for
settling industrial disputes by conciliation.
The Payment of Bonu!i Act, 1965
lays down what bonus is payable to the \Vorkmen.
Using the power under
E
S. 3(c) of the 1947 Act and based oo the suggestion of the State Labour
Conference (Sugar), the State Govt appointed a tripartite committee in Octo·
ber 1968 consisting of 3 nominees of the Indian Sugar Mills Association arid
their representatives of the workmen, the Labour Commissioner
being
tile
Chairman of the Committee. The notificatioo under s. 3 (b) who issued with
a view to consider and make recommendations to Government on 1he question
of grant of bonus for 1967-68 by the Vacuum Pan S\Jgar Factories of the
F
State on the basis of the Payment of Bon11c; Act 1965, subject to such modifications as may be mutually:. agreed upon. The Association is a Trade Union
registered under the Trade Unions Act, 1926.
Its functions are indicated in
lhe definition of 'trade union' in Section 2(h) of that Act, and include regula ..
tion of relations between the workmen and en1ployers. Thus, the Association
was within its competence to nominate three representa·tives to sit on the
• Committee to regulate the relations between the Me1nber-employees and the
· G
workmen employed.
The ilPpellant is a Member of the said Association.
H
The Committee held several sittings and at some stages, the appeUant or
his representative did participate directly or indirectly in the deliberations. The
workers' representatives actua11y accepted the formula put
forward
by
the
President of the Management's Association.
On receipt of the recommendation under Section 3(c), the Govt. issued an order under s. 3(b) implementing
those rec9mmendations. Although Section 3(b) does not depend for coming
into play upon any· report under s. 3 ( c), the Govt. constituted the Committee
under ~- 3(c) before taking a~~ step under s. 3(b) as n measure to ensure
the fairne8s to the concerned parties.
The appellant filed a writ petition in
I
•
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BAST! SUGAR MILLS V. U. P. STATE
591
the High Court.
The learned single Judge dismissed the writ petition taking
a view that an agreement which is recognised by s. 34 of the Bonus Act,
existed i11 this case and, therefore, the order which merely gave effect to that
agreement was not bad in law. On appeal the two Judges of the Bench dis~
agreed and the case went before the third learned Judge of the High Court
who upheld the order of the learned single Judge on the ground that there
was an agreement under s. 34 of the Bonus Act.
The ~ppellant contended :-
1. The State Govt. cannot a.ct in the area of bonus
without breach
of
~e embargo in s. 34 of the Bonus Act, and, therefore, the impugned notification must fail for want of power.
2. S.nce the Bonus Act is a complete Ccx.ie covering profit sharing bonus,
no other la\\' can be pressed into service to force payment of Bonus by the
Management.
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3. Section 3(b) of the U.P. Act is independent of any agreement between
the affected parties and the notification thereunder operates on its own and rJ.Ot
by force of consensus or contract between the workmen and the moo.agement.
It was, therefore, wrong for the High Court to have salvaged the notification
under "· 3 (b) as embodying the agreement to pay bonus.
D
4. As a matter of fact, there was no agreement between the appellant and
the \\Orkmen within the n1c:aning of ~eciion 34 since the representatives of the
Association had no power to bind its members by any agreement on bonus
having been appointed solely to make certain recommendations. The appellant
had specifically informed the Association that it did not agree to any varia-tion
from th.e approved balance-sheet Of the Company.
E
-.....
Dismissing the appeal the Court,
..
HELD : The effect of s. 34 is that anything inconsisterit with the Bonus
Act in any other law will bow and bend before it. If concluded agreement
could be read into the recommendations of tripartite committee relating to
bonus it would be valid despite s. 34. The two Courts have accordingly found
that there was an agrement. This Court is rarely disposed to reverse a factual
affirmation concurrently reached b~ the High Court at hvo tiers. [601 A, B, D]
F
The contention that the authority of the tripartite committee was limited
to making recommendations on the grant of bonus subject to such modifications a5 mutually agreed upon is formally correct but why could the committee
which bad representatives of both the wings of the industry not mutually agree
upo:Il bonus formula? There was nothing in the notification prohibiting it.
G
There was everything in the notification promoting it.
The whole process
was geared to mutua11y agreed solutions. Once the representatives of management M.d labour reached an agreement, substantially on the basis of the Bonus
Act, they would proceed to recommend to Govt. the acceptanee of that agreement. The first notification did not shut out, but, on the other hand, welcomed
mutual &greement. As between the two wings, an agreement materialised. Then
il became Government's respoosibility effectively to resolve the crisis and beH
boved it to put teeth into the agreement by making it a binding order under
s. 3 AA. The Association is a Trade Union. It can bind its members. The notifi4-549SCil78
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SUPREME COURT REPORTS
[1979] 1 S.C.R.
cation under s. 3(c} itself authorised the Committee consider the grant of bonus
on terms mutually a.greed upon. The authority to reach agreement on behalf of
the appellant is implicit under the notification under s. 3(b). Throughout the
several meetings and investigations of the tripartite Committee, the appelJant
supplied all the facts and details sought concerning the formulation and the
data for arriving at an acceptable solution. The formula of the Committee
was based largely on the Bonus Act. What the employees' representatives did
was merely to accept the proposal of the President of the Association of
employers. There was a written agreement dt. 5th June, 1969 to which the
representatives of both sides were signatories. To dismiss the whole consensual
adventure and the culminating written agreement as nothing but an exercise
in recommendatory or advisory futility is to bid farewell to raw realities.
Social justice is made of rugged stuff. Industrial jurisprudence does not brook
nice nuances and torturesome technicalities to stand in the way of just solutions reached in a rough and ready manner.
Broad consensus between the
two parties does exist here, as is emphatically underlined by the circumstances
that, all the mill owners except the appellant have stood by it and all the
workers.
There is no substance in the submission of the appellant that there
was no agreement for payment of bonus within the meaning of s. 34.
[601 E-H, 602 F, G, 603 A-C, Fl
Section 3 of the U.P. Act is not inconsistent with the Bonus Act. The
Bonus Act is a long range ren1edy to produce peace. The U.P. Act provides
a distress solution to prcxiuce truce. The Bonus Act adjudicates rigbts of
parties, the U.P. provision meets :t·n emergency situation on an ad1ninistrative
basis. [604 B-Cl
These social projections and operationaJ. limitations of the two statutory
provisions must be grasped to resolve the legal conundrum.
/\. broad national
policy on bonus, however admirable, needs negotiation, consultation, inter-state
co-ordination and diplomacy and causes delay.
Hungry
families ot
re!>tive
viorkers i11 militant moods urgently ask for bonus for onan1 in Kcrala, Puja
in Bengal, Dewali in Gujarat, or other festivals elsewhere· for a short spell
of cheer in a long span of sombre life. The State Govt. with economic
•
•
justice and welfare of workers brooding over its head is hard preMCd for
public order and maintenance of esl!<ntia! supplies. [604 D-607 G, Hl -f _
Ov!L APPELLATE JURISDICTION: Civil Appeal No. 2148 of 1977.
--
Appeal by Special Leave from the Judgment and Order dated
19-10-76 of the Allahabad High Court in Special Appeal No. 412
of 1971.
Y. S. Chitale, S. Swarup and Sri Narain for the Appellants.
G. N. Dikshit, M. V. Goswami and 0. P. Rana for Respondent No.
1.
Yogeshwar Prasad, Miss Meera Bali and Rani Chhabra for Respon-
'
dent No. 2.
H
The Judgment of the Court was delivered by
KRISHNA IYER, J.
Undaunted by a direction of the State Government under the Uttar Pradesh Industrial Disputes Act, 1947 (the U.P.
BAST! SUGAR MILLS v. u. P. STATE (Krishna Iyer, J.)
5 93
Act, for short), unsuccessfully attacked before a learned Single Judge
·and in appeal from his judgment, the appellant-owner of two sugar
factories in Uttar Pradesh-ha~ secnred special leave to reach this
Court and press before ns a few jurisdictional points which, if valid,
me deprivatory of the impugned notification under s. 3 (b) of the Act.
Before we open the discussion, and, indeed, as paving the way for it,
we may remind onrselves of a jural fundamental articulated elegantly
ju a different context by Mr. Justice Cardozo(') :
'
"More and more we lawyers are awaking to a perception of the
--\.truth that what divides and distracts us in the solution: of a legal prob_,_,, !em is not so much uncertainty about the law as uncertainty about the
facts-the facts which generate !he law.
Let the facts be known as
they are, and the law will sprout from the seed and turn its branches
.,.
toward the light."
-
•
Social realities mould social justice and the compulsions of social
justice, in the context of given societal conditions, constitute the basic
facts from which blossom law which produces order.
The search for the social facts behind s. 3 of the U.P. Act takes
us to the Objects and Reasons Act set out therein :
"Following the lapse of Rule 81-A of the Defence of India Rules,
the Government of India enacted the Industrial Disputes Act, 1947,
but this Act was found inadequate to deal with the spate of strikes,
lock-outs and industrial disputes occurring in the province. Government
were, therefore, compelled to promulgate the United Provinces Industrial Disputes Ordinance, 194 7, as an emergency measure till more
comprehensive Legislation on the subject was enacted.
-r--
Although more than two years have passed since the termination
) of the war, normal life is still far from sight. There is a shortage of
foodgrains and all other essential commodities and necessities of life.
Maximum production is required to relieve the
common want and
misery. Prices continue to be rising and life has become very difficult
for the common man.
The loss of every working hour adds to the
suffering of the
community.
In these circumstances, it is essential
that Government should have powers for maintaining industrial peace
and production and for the speedy and amicable settlement of industrial
disputes.
The bill, which is similar to the ordinance already in force,
provides for such powers_"
(emphasis added)
{l) Benjamin Nathan Cardoio "What Medicine can do for Law" address
before the New York Academy of Medicine, N0\'. 1, 1928-Readings
iin Law and Psychiatry.
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SUPREME COURT REPORTS
[1979] 1 S.C.R.
The immediate concern of the court iu this case is with s. 3 which,
in its opening part, luminously projects the State control obligated by
community well-being.
Even here, -.Ve may read the relevant part of
s. 3.
3. Power to prevent strikes, lock-outs, etc.-If, in the opinion of
B
the State Government it is necessary or expedient so to do for securing
the public safety or convenience or the maintenance of public order or
supplies and services essential to the life of the community, or for
maintaining employment, it may, by general or special order, make:
provision -
_(--
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(emphasis, added)
(a) for prohibiting, subject to the provisions of the order,
strikes or lock-outs generally, or a strike or lock-out
in connection with any industrial dispute;
(b) for requiring employers, workmen or both to observe
for such period, as may be specified in the order,
such terms and conditions of employment as may be
determined in accordance with the order;
(c) for appointing committees, representative both of the
employer and workmen for securing amity and good
relations between the employer and workmen and for
settling industrial disputes by conciliation; for consultation and advice on matters relating to production,
organisation, welfare and efficiency;
( d) for constitution and functioning of Conciliation Board
for settlement of industrial disputes in the manner
specified in the order;
xx
xx
xx
Provided that no order made under clause (b) -
(i) shall require an employer to observe terms and
conditions of employment less favourable to the
workmen than those which were applicable to
them at any time within three months preceding
the date of the order;
xx
xx
xx
The testimony from these texts, which are part of the legislative
ff
package, is the critical factor underlying governmental order in our
constitutional system.
An insight into it is worthwhile as a tool of
interpretation of s. 3 of the U.P. Act and its harmonisation with s. 34
•
. ·~
'
,
•
of the Payment of Bonus Act, 1965 ·(the Bonus Act, for brief). A
synthesis of these two· statutes is the key to the problems posed by
Shri Chitale before us, arguing the case for the appellant.
When crisis conditions grip the community the first imperative of ·
go¢ 'government, 'order', takes precedence; and th~ Executive transfixed between 'govern' or 'get out' '!_nd guided_by value judgments
resorts to firm action'. --Exigent solution of problems affecting the wellbeing of the have-nots, in a social justice setting, desiderates provisional
directives to the haves to di•gorge payments, not as final pronouncements on rights but as immediate palliatives to preserve the peace. This
is police power at its sensitive finest when State i'nd society are confronted by the dilemma of 'do or die'. And, in a broader perspective,
Governments of the Third World must hear the voice which moved the
·,Objective Resolution in the Constituent Assembly, while seeking light
to keep loving peace :
'The service of India means the service of the millions
who suffer. It means the ending of poverty and ignorance
and disease and inequality of opportunity: The ambition of
the greatest man of our generation has been to wipe every
tear from every eye. That may be beyond us, but as long as
• there are tears and sufferings, so long our work will not be
over.r)
The problems of law are, at bottom, projections of life.
"Law is a form of order and good law must necessarily
mean good order."(')
We touch these chords because the roots of jurisprudence lie in the
soil of society's urges, and its bloom in the nourishment from the
· humanity it serves. To petrify statutory construction by pedantic
impediments and to forget the law of all laws, viz. the welfare of the
people, is to bid far~wcll to the grammar of our constitutional order.
Its practical application arises in the present case.
Before going further
we sketch the facts of the present case and then on to the larger
principles, an understanding of which will unlock the crucial questions
arising in the case.
·
The appellant, as stated earlier, runs two su&ar factories at two
different places.
There are around .71 such factorles in Uttar Pradesh
whose economy~ in large measure, depends on the sugar_ industry.
(1) The Indian Constitution-Cornerstone of a Nation by Granville
1972 Edn. p. 26.
.
'
(2) Poiitica, Book VII, Chapt~r 4, S~ction S.
-
,A.ustin.
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SUPREME COURT REPORTS
[1979] 1 S.C.R.
Moreover, sugar is an essential commodity.
Thus, these factories and
the army of workers employed therein fall within the strategic sector
of the State economy •. It is but natural that Government is highly
sensitive in the matter of maintenance of sugar supplies and the smooth
· working of the sugar factories.
Any explosive situation in the. shape
of an industrial dispute and any disruptive factor throwing out of gear
the employment in factories is sure to throw into disarray public safety,
public order, public 'produ-ction and distribution system and public em- .
ployment, using .these expressions in their social connotation.
Roscoe
Pound's words are jurisprudentially apt : (')
"Law is more than a, set of abstract norms or kgal order.
It is a proc~s of balancing conflicting interests and secunng
the satisfaction of the maximum wants ··with the minimum
friction."
,And, Paton has set the_ tone for. Pan IV of our. Canstitution to be
used as background music, if we may say so : _
"the law· itself cannot be impartial. .• for its very raison -
d'etre is to prefer one social interest of anothei.''(2)
As was the wont, presumably, there was apparently a clamour in
1968 for workers' bonus which hotted up,
threatening community
tranquillity, smooth supplies essential to the life of the community and
maintenance of employment and public safety.
Every industrial dispute has a potential for large scale breach ot
the peace when the factories ·and workmen affected are numerous.
But the general unrest induced by industrial demands and resistance
. may, on critical occasions, blow up unless quia timet action to de-fuse
•
are taken., This measure has necessarily to be at the administrative
level, since the judicial process is prone to suffer from slow motion.
The U.P. Legislature, with comprehensive vision, provided for langrange adjudicative resolution of industrial disputes
and
short-run
executive remedies to pre-empt and contain outbreaks which may get
out of control once ignited, and may even cost human lives in the 'firefighting' police actions :
"A government ought to contain in itself every power
requisite to the full accomplishment of the objects committed
to its care, and to the complete exe:cution of the trusts for
(1) Interpretation of Legal History, p. 165, quoted in 6•Crin1inal lawPrinciples of Liability by T. S. Batra, p. 612.
(2} A Text-Book of Jurisprudence p. 31 9
quoted
in '"Cdrr.iilal
Law·
Priucip}cs of Liability by T. S. Bat!__a!. p. 612 .
lr
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DASTI SUGAR MILLS V. u. P. STATE (Krishna Iyer, /.)
597
which it is responsible, free from every other control but a
regard to the public good and to the sense of the people.(')
From this angle, s. 3 has been designed as an emergency provision to
be exercised in an excited phase of industrial collision.
Using the power under s. 3 ( c) of the Act and based on the suggestion of the State Labour Conference (Sugar) the State Government
appointed a tripartite committee in October, 1968 consisting of three
nominees of the Indian Sugar Mills Association and three representatives of the workmen, the Labour Commissioner being the Chairman
of the Committee.
The notification under s. 3(c) was issued with a
view to-
"consider and make its recommendations to Government
on the question of grant of bonus for 1967-68 to workmen
by the Vacuum pan Sugar factories of the State on the basis
of the Payment of Bonus Act 1965, subject to such modifications as may be mutually agreed upon."(2)
No one, at any stage, has assailed the presence of the statutory preconditions of social urgency.
We proceed on the footing that a ftareup was in the offing and the State acted to pre-empt a break-down.
It is pertinent to note that the Association is a trade union registered under the Trade Unions Act, 1926.
Its functions are indicated
in the definition of "trade union" in s. 2 ( h) of that Act and include
regulating the relations "between workmen and employers". Thus, the
Associlrtion was functionally within its competence to nominate three
representatives to sit on the Committee to regulate the relations between
the member-employer. and the workmen employed.
The appellant is
a member of the said Association.
It is significant to remember that the State Government constituted
the tripartite committee under s. 3 ( c) as an emergency measure before
taking steps under s. 3 (b) of the Act so that it may inform itself in a
responsible way through the recommendations made by the Committee
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which represented both the wings of the industry.
Although s. 3(b)
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does not depend, for coming into play, upon any report under s. 3 ( c)
this was a measure to ensure fairness to the concerned elements. The
Committee held several sittings and, at some stages, the appellant or his
representative did participate directly or indirectly in the deliberations.
Equally relevant is the circumstance that the worker's representatives
(I) The Administration of Justice--Melvin P. Sikes, Chapter 7, Pawns of
Politics and of Power, P. 120
12) Notification dated 17.10. !96S of the U.P. Govt. Labour (CJ Dept.
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SUPREME COURT REPORTS
[1979] I s.C.R.
actually accepted the
formula put forward by the President of the
Managements' Association.
We mention these circumstances to indicate that the scales, if at all, were tilted in favour of the mill owners
and Government, on receipt of the recommendations and anxious to
freeze the situation, issued an order under s. 3 (b) incorporating and
implementing those recommendations.
That notification which was
impugned before the High Court and is challenged before us reads :
"WHEREAS on the recommendations
of
the
State
Labour Tripartite Conference (Sugar)
held on June 16,
1968, a Committee was constituted
under
Labour
(C)
Department, notification No. 7548 (HI) XXXVI-C-109 (HI) I
68, dated October 17, 1968, to consider the
question
of
grant of bonus for the season 1967-68 to their
workmen
by the. vacuum pan sugar factories of the State on the basis
of the Payment of Bonus Act, 1965 subject to such modifications as may be mutually agreed upon and to make its
recommendations.
AND WHEREAS, the said Committee has considered
this question in various meetings the last meeting having
been held on June 5, 1969, and has submitted its recommendations to the State Government :
AND WHEREAS, the said Committee has
succeeded
in bringing about an agreement in regard to the payment of
bonus for the season 1967-68 between the representatives
of employers and employees on the basis of
Payment
of
Bonus Act, 1965, with certain modifications and adjustments
and has made recommendations on the subject accordingly
which have been accepted by the State Government;
AND WHEREAS, in the opinion of the State Government it is necessary to enforce the recommendation of the
said Committee for securing the public convenience and •he
maintenance of public order and
supplies
and
services
G
essential to the life of the community and for maintaining
employment;
"
NOW, THEREFORE, in exercise of the powers under
clause (b) of section 3 of the U.P. Industrial Disputes Act,
1947 (U.P. Act No. XXVIII of 1947), the
Governor of
Uttar Pradesh is pleased to make the following order and to
direct with reference to section 19 of the said Act that the
uotice of this be given by publication in the office Gazette;
'
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BAST! ,SUGAR MILLS v. u. P. STATE (Krishna Iyer, !.)
5«99
ORDER
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2. (a) All the Vacuum Pan Sugar
Factories
in
the
State whose names have been mentioned in the Annexure
'A' except the Kisan Co-operative Sugar Factory, Majhola
(Pilibhit), shall pay bonns for the year 1967-68 to all their
employees, permanent seasonal or temporary including contract labour who have worked for not less than 30 working
days in the accounting year 1967-68;
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The High Conrt repelled the challenge and upheld the notification,
taking the view that an agreement as recognised ln s. 34 of the Bonus
Act existed in this case and so the order which merely gave effect to
that agreement was not bad in Jaw.
The main ground of attack before us is that the State Government
cannot act in the area of bonus without breach of the embargo in
s. 34 of the Bonus Act and so the impugned notification must fail for
want of power.
Although this is the thrust of the submission, Sbri
Chitale has trichotomised it, as it were. First, the Bonus Act being a
complete Code covering profit-sharing bonns, no other law can be
pressed into service to force payment of bonus by the managements.
Secondly, s.3 (b) of the U.P. Act is independent of any agreement
between the affected parties and the notification thereunder operates
on its own and not by force of consensns or contract between the workmen and the managements. In this view, it was wrong for the High
Court to have salvaged the notification under s. 3 (b) as embodying
an agreement to pay bonus. The third submission of counsel was that
as a fact there was no agreement between the appellant and his workmen v.1thin the scope of s. 34 of the Bonus Act since the representatives of the Association had no power to bind its members by any
agreement on bonus, having been appointed solely to make certain
reeommendations. Moreover, the appellant had specifically informed
the representatives of the Association that it did not agree to any
variation from the approved balance-sheet of the company and had
withdrawn its consent to the formula which found favour with the
Committee. Finally, though feebly, it was argued that if an agreement
could be spelt out under s. 34 of the Bonus Act enforcement should
be left to s. 21 of that Act and not to the punitive recovery provisions
of the U .P. Act.
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The Single Judge of the High ~ourt dismissed the writ petition
reading an agreement into the Committee's recommendations and the
eventual order under s. 3(b) of the Act. This agreement was
valid
under s. 34 of the Bonus Act. On appeal, the two Judges on the Bench
disagreed and the case went before. a third Judge, who in an elaborate
judgment, agreed with the learned Single Judge and upheld the order
of the Government as an agreement under s. 34 of the Bonus Act. We
now proceed to discuss the merits of counsel's. contentions.
We focus our attention on two principal facets of the question.
They are (a) whether s. 3(b) is inconsistent with the Bonus Act; and
(b) whether an agreement within the meaning of s. 34(1) (as the
law then stood) could be spelt out of the facts of the present case.
There is no challenge to the competence of the State Legislature
to euact s. 3 of the Act. Indeed, more than one item in Lists II and III
will embrace legislation of the pattern of s. 3. Even so, the short point
sharply raised by Shri Chitale is that Parliament, having enacted the
Bonus Act in 1965, occupied that part of industrial law, and s. 34 in
terms contains a non-obstante clause. That section reads :
"Effect of laws and agreements inconsistent with the Act.
34. (1) Save as otherwise provided in this section, the
provisions of this Act shall have effect notwithstanding
anything inconsistent therewith contained in any other law
for the time being in force or in the terms 'Of any award,
agreement, settlement or contract of service made before
the 29th May, 1965.
34. (2) ................. .
34. (3) Nothing contained in this Act shall be construed to preclude employees employed in any establishment
or class of establishments from entering 'into agreement with
their employer for granting them an amount of bonus under
a formula which is different from that under this Act :
Provided that any such agreement whereby the employees relinquish their right to receive the minimum bonus
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BAST! SUGAR MILLS v. u. P. STATE (Krishna Iyer, l.)
601
under section 10 shall be null and void in so far as it purA
ports to deprive them of such right."
The effect of this provision is that anythlng inconsis~ent with the
Bonus Act contained in any other. law will bow and bend before it.
Secondly, agreements made after 29th May 1965 will be valid regarding bonus even if they be inconsistent with the formulae in the bonus
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Act.
Shri Chitale did not dispute the proposition that if a concluded
agreement could be read into the recommendations of the tripartite
Committee relating to Bonus, it would be valid despite s. 34; but he
urged before us that it was impossible to weave out of mere recommendations the web of a concluded contract on bonus. He canvassed
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before us, further, that if an agreement on bonus
was
necessarily
inferable from the proceedings of the \ripartitc committee, the enforcement thereof could be only under s. 21 of the Bonus Act and not by
reliance on the more drastic processes of the U.P. Act.
A torrent of objetive circumstances has emerged in this case to
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wash out these submissions. This Court is rarely disposed to reverse
a factual affirmation concurrently reached by the High Court at two
tiers. Even so, we may rush past the more potent circumstances which
have a compulsive force in arriving at the conclusion aforesaid.
Shri Chitale stressed that the Committee itself had a
ftmctional
limitation writ on the face of the order under s. 3(cl. Its authority
was limited to making recommendations on the grant of bonus for
1967-68 on the basis of the Bonus Act, subject to such mooifications
as mutually agreed upon. Formally, this is correct. But why could the
Committee which had representatives of both the wings of the industry
not mutually agree upon a bonus formula ? Ther0 was nothing in the
notification prohibiting it. There was everything ir:
the
notification
promoting it. The whole process was geared to mutually agreed solutions. Of course, once the representatives of managements and labour
reached an agreement, substantially on the basis of the Bonus Act,
they would proceed to recommend to Government the acceptance of
that agreement. The notificatioo under s. 3(c) contemplated mutual
agreemeut upon bonus as the first step and the recommendation of the
formula so reached as the second step. The good offices of the Labour
Commissioner was also available. In short, the first notification did not
shut out, but, on the other hand, welcomed mutual agreement.
As
between the two wings, an agreement materialised. Then it became
Government's responsibility effectively to resolve the crisis and behoved
it to put teeth into the agreement by making it a binding order under
s. 3 (b). Thereafter, the arm of the law, as provided in the U.P. Act,
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went into action if there was violation. The object of the Government
being to keep the peace and to interdict disruption it did not rest content with an agreement within the meaning of s. 34 and resort to the
leisurely processes of s. 21. Exigent situations demand urgent enforcement; and therefore government went a step further than the agreement and embodied it in an order under s. 3 (b). This incorporation
in a notification under s. 3 (b) did not negate the anterior agreement
between the parties. The order of Government under s. 3(b) makes
the dual stages perfectly plain. For instance, there is the following
tell-tak recital ! "Whereas the said Committee has succeeded in bringing about an agreement in regard to the payment of bonus for the
season 1967-68 between the representatives of the
employers
and
employees on the basis of Payment of Bonus Act, 1965, with certain
modifications and adjustments". In unmincing language, the notification states that an agreement on the payment of bonus has been successfully brought about substantially on the lines of the Bonus Act.
In the same notification, Government proceeds to state that the said
agreement has been forwarded to it in the shape of recommendations
which have been accepted and enforced in exercise of the powers conferred by clause (b) of s. 3 of the Act. The anatomy of the
order
under s. 3 (b) being what we have explained abov·e, the inference is
inevitable that there is· a clear agreement in regard to the payment of
bonus for the relevant season between the employers and employees
and ingenious argument cannot erode that effect.
The next limb of the argument of Shri Chitale is that in fact
there is no evidence of his client having authorised the representatives
of the Association to act on its behalf in agreeing to the bonus formula. On the contrary, he had withdrawn the authority originally
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conferred. We cannot agree with this specious, though plausible, submission. It admits of no doubt that the Association is a trade union
registered under the Trade Unions Act and the functional competence
of a trade union definitionally extends to regulating the relations between workmen and employers. S. 2 (h) to negotiate an agreement on
payment of bonus surely falls within the scope of regulation of the
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relations between the workmen and the employers. Secondly, the notifi"ation under s. 3 ( c) itself authorises the Committee to consider the
grant of bonus on terms mutually agreed upon. Authority to reach
agreement on behalf of the managements is thus implicit in the notification under s. 3 ( c). Moreover, the Association, having the capacity
to represent all the members within the area of its authority, sat on
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the committee though its representatives and became effective proxies
of the appellant was present in the tripartite Conference at Naini Tai
on Jun" 16, 1968 and it was at that Conference the decision to set up
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HASTI SUGAR MILLS v. u. P. STATE (Krishna Iyer, I.)
603
the Committee was made and a resolution to that effect passed, leading
to the notification of October 17, 1968. Moreover, throughout the
several meetings and investigations of the tripartite Committee, the
appellant supplied all the facts and details sought. concerning
the
formulation and the data for arriving at an acceptable solution. The
formula of the Committee was based largely on the Bonus Act itself
with some variation regarding the valuation of
the
closing stock.
Importantly, what the employees' representatives did was merely to
accept the proposal of the President of the Association of employers.
There was a written agreement dated l@e 5, 1969 to which the representatives of both sides were signatories. To dismiss the whole consensual adventure and the culminating written agreement as nothing
but an exercise in recommendatory or advisory futility is to bid farewell to raw realities. Industrial jurisprudence does not brook
nice
nuances and torturesome technicalities to stand in the way of
just
solutions reached in a rough and ready manner. Grim and grimy lifesituations have no time for the finer manners of elegant jurisprudence.
Social justice is made of rugged stuff. Broad consensus between the
two parties does exist here, as is emphatically underlined by the circumstance that 'all the mill owners except the appellant have stood by
it-and all the workers'. Where social justice is the touch· stone, where
industrial peace is the goal, where the weak and the strong negotiate
to reach workable formulae unruffled by the rigidities and formalisms
of the Jaw of contracts, it is impermissible to frown down
the fair
bonus agreement reached by the representatives of both camps and
accepted by the employees in entirety and the whole block of employers
minus the appellant, on a narrow construction of the notification under
s. 3(b) of the U.P. Industrial Disputes Act, 1947 or s. 34 of the
Bonus Act or s. 2(c) of the Contract Act. Labour law is rough hewn
and social justice sings a different tune. We reject, withont hesitation,
the appellant's submission that there was no agreement for payment
of bonus within the meaning of s. 34 of the Banns Act and affirm the
con~urrent finding of the High Court on that issue.
The second seminal problem of power that falls for consideration
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tional portent, somuch so decisional elucidation becomes necessitous.
We have stated earlier that s. 34 of the Bonus Act has a monopolistic
tendency of excluding other laws vis-a-vis profit-sharing bonus.
The
basic condition for nullification of s. 3 (b) of
the U.P. Act is that,
when it enters the area of bonns, it is inconsistent with the provisions
of the Bonus Act. "Inconsistent", according to Black's Legal Dictionff
ary, means 'mutually repugnant or contradictory; contrary, the one to
the other so that both cannot stand, but the acceptance or establish-
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ment of the one implies the abrogation or abandonment of the other'.
So we have to see whether mutual co-existence between s. 34 of the
Bonus Act ands. 3(b) of the U.P. Act is impossible. If they relate to
the 'ame subject-.matter, to the same situation, and both substantially
overlap and are co-extensive and at the same time so contrary and
repugnant in their terms and impact that one must perish wholly if the
other were to prevail at all-then, only then, are they inconsistent. Jn
this sense, we have to examine the two provisions. Our conclusion,
based on the reasoning which we will presently indicate, is that 'inconsistency' between the two provisions is the produce of ingenuity
and consistency between the two Jaws flows from imaginative understanding informed by administrative realism. The Bonus Act
is
a
long-range remedy to produce peace; the U.P. Act provides a distress
solution to produce truce. The Bonus Act adjudicates rights of parties;
the U.P. provision meets on emergency situation on an administrative
basis.
These social projections and operational limitations of the two
statutory provisions must be grasped to resolve the legal conundrum.
When 'the sequestered vale of life' is in imminent peril of disruption
immediate tranquillisers are the desideratum. The escalating danger
to law and order, to public safety, to maintenance of supplies essential to the life of the community, the break-down of production and
employment-these anti-social consequence of 'the madding crowds'
'ignoble strife' are sought to be controlled by a quick shot in the arm
by use of s. 3 (2). It is a balm for the time, not a cure which endures.
Indeed, it is an administrative action, not a quasi-judicial determination.
We may easily visualise other explosive occasions which traumatise society and so attract s. 3 (b).
The specific fact-situation which confronted the State must be seen
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in perspective. Labour and capital are partners in production. When
one of the partners numerous but needy, demands a share in the
profits, beyond wages, to bett~r its lot, industrial legislation chalks out
rights and limits, prescribes fonnulae, creates adjudicatory machinery,
awards are made, reviewed and enforced and parties seek social
justice through the judicial process.