# ROHTAS INDUSTRIES LTD. & ANR v. ROHTAS INDUSTRIES STAFF UNION AND ORS

- **Citation:** [1976] 3 S.C.R. 12
- **Court:** Supreme Court of India
- **Decided:** 1975-12-18
- **Case number:** Civil Appeals Nos. 1727-1728 of 1969
- **Bench:** Y. V. Chandrachud, V. R. Krishna Iyer, A. C. Gupta
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/rohtas-industries-ltd-anr-v-rohtas-industries-staff-union-and-ors-6736
- **Pages:** 16

## Headnote

Constitution of India Article 226 and 226(/A)-Powers of Higf1 Court to
issue urrit against arbitrators under section lOA of Industrial Disputes ActArbitration Act-Error apparent on the face of the record-Speaking awardError of Law. Industrial Disputes Act, 1947-Secs. 2(k) 10-A, 23, 24, 33CJ.Vhether en1ployers can be awarded cornpensation for loss op profit due to illegal
strike under Industrial Disputes Act-Industrial Dispute-Enforce1nent of special
rights created ·by special statute whether confined to retnedies provided by tlze·
statute.
During the year 1948, the respondent, workmen working with both the appellants v.'ent on illegal strike on account of Tradel Union rivalry. The workmen
\Vere not paid wages for the strike period and the appellants lost their profit ·
during the period. The employers and the workmen entered into an agreement
during the pendency of the conciliation proceedings and referred the claims of
\Vorkmen for salaries during the strike period and the claims of the employers
for compensation for loss dlJe to the strike to the joint arbitration of two retired
Ifigh Court Judges and one retired MemQer of a Labour Appellate Tribunal under
section lO~A of the Industrial Disputes Act 1947.
The arbitrator delivered their avlard and held that the workmen participating
in the strike were not entitled to wages for the strike period. The arbitrators,
however, awarded huge compensation to the employers against the workmen for
the losses incurred by the employers during the strike period. The v,rorkmen
challenged the av.·ard as illegal and void by filing hvo writ petitions in the High
Court. The High Court upheld that part of the award which directed that the
workn1en participating in the strike were not entitled to -wages.
The High Court,
however, quashed the part of the av.'ard which directed payment of compensation
by the V.'orkers to the management.
In appeal by Special Leave under Article 136, the appellants contended :-
1. The award under section 10-A of the Act savours of a private arbitration
and is not amenable to correction under Article 226-of the Constitution.
2. The award Of compensa_tion by the arbitrators suffers from no vice which
can be regarded as recognised grounds for the High Court interference.
HELD : ( 1) The expansive and extraordinary powers of the· High Court
under Article 226, as wide as the amplitude of the language used, indiCates
and so can affect "any person", even a private individual and be· available for
"any other purpose", even one for which another remedy may exist. The in~
sertion of Article 226(1A) reiterates that writ power can be exercised against any
person by refere:Rce to
the
residence of such person.
It is one thing
G
to affirm the
jurisdiction and
another to authorise free exercise. This
Court hns
spelt out wise
and clear restraints
on the
use
of
this
extraordinary remedy and High Courts will not go beyond those wholesome
.f-·
H
inhibitions except where the monstrosity of the situation or other exceptional
circumstances cry for timely judicial interdict or mandate. [17C-E]
2.
An arbitrator exercising powers under section lOA can bind even those
who are not parties to the reference or agreement and the whole exercise under
section IOA as well as the source of the force of the award on publication
derive. from the statute. It is legitimate to regard such an arbitrator now as
part of the methodology of the sovereign's dispensation of justice, thus falling
within the rainbow of statutory tribunals amenable to
judicial
review. The
award in the present case is not beyond the legal reach of Article 226. [18B-C]
•
ROHTAS INDUSTRIES V. STAFF UNION
13
3. The answer to the question whether the High Court should have· exercised
its powers under Article 226 in the present case will depend upon wl;tether the
arbitrator has tied himslf down to obviously unsound legal proposition in reaching his verdict appearing from the face of the award. The arbitrator may not
state the law such, ev

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ROHTAS INDUSTRIES LTD. & ANR.
v.
ROHTAS INDUSTRIES STAFF UNION AND ORS.
December 18, 1975
[Y. V. CHANDRACHUD, V. R. KRISHNA IYER AND A. C. GUPTA, JJ.]
Constitution of India Article 226 and 226(/A)-Powers of Higf1 Court to
issue urrit against arbitrators under section lOA of Industrial Disputes ActArbitration Act-Error apparent on the face of the record-Speaking awardError of Law. Industrial Disputes Act, 1947-Secs. 2(k) 10-A, 23, 24, 33CJ.Vhether en1ployers can be awarded cornpensation for loss op profit due to illegal
strike under Industrial Disputes Act-Industrial Dispute-Enforce1nent of special
rights created ·by special statute whether confined to retnedies provided by tlze·
statute.
During the year 1948, the respondent, workmen working with both the appellants v.'ent on illegal strike on account of Tradel Union rivalry. The workmen
\Vere not paid wages for the strike period and the appellants lost their profit ·
during the period. The employers and the workmen entered into an agreement
during the pendency of the conciliation proceedings and referred the claims of
\Vorkmen for salaries during the strike period and the claims of the employers
for compensation for loss dlJe to the strike to the joint arbitration of two retired
Ifigh Court Judges and one retired MemQer of a Labour Appellate Tribunal under
section lO~A of the Industrial Disputes Act 1947.
The arbitrator delivered their avlard and held that the workmen participating
in the strike were not entitled to wages for the strike period. The arbitrators,
however, awarded huge compensation to the employers against the workmen for
the losses incurred by the employers during the strike period. The v,rorkmen
challenged the av.·ard as illegal and void by filing hvo writ petitions in the High
Court. The High Court upheld that part of the award which directed that the
workn1en participating in the strike were not entitled to -wages.
The High Court,
however, quashed the part of the av.'ard which directed payment of compensation
by the V.'orkers to the management.
In appeal by Special Leave under Article 136, the appellants contended :-
1. The award under section 10-A of the Act savours of a private arbitration
and is not amenable to correction under Article 226-of the Constitution.
2. The award Of compensa_tion by the arbitrators suffers from no vice which
can be regarded as recognised grounds for the High Court interference.
HELD : ( 1) The expansive and extraordinary powers of the· High Court
under Article 226, as wide as the amplitude of the language used, indiCates
and so can affect "any person", even a private individual and be· available for
"any other purpose", even one for which another remedy may exist. The in~
sertion of Article 226(1A) reiterates that writ power can be exercised against any
person by refere:Rce to
the
residence of such person.
It is one thing
G
to affirm the
jurisdiction and
another to authorise free exercise. This
Court hns
spelt out wise
and clear restraints
on the
use
of
this
extraordinary remedy and High Courts will not go beyond those wholesome
.f-·
H
inhibitions except where the monstrosity of the situation or other exceptional
circumstances cry for timely judicial interdict or mandate. [17C-E]
2.
An arbitrator exercising powers under section lOA can bind even those
who are not parties to the reference or agreement and the whole exercise under
section IOA as well as the source of the force of the award on publication
derive. from the statute. It is legitimate to regard such an arbitrator now as
part of the methodology of the sovereign's dispensation of justice, thus falling
within the rainbow of statutory tribunals amenable to
judicial
review. The
award in the present case is not beyond the legal reach of Article 226. [18B-C]
•
ROHTAS INDUSTRIES V. STAFF UNION
13
3. The answer to the question whether the High Court should have· exercised
its powers under Article 226 in the present case will depend upon wl;tether the
arbitrator has tied himslf down to obviously unsound legal proposition in reaching his verdict appearing from the face of the award. The arbitrator may not
state the law such, even then such cute silence confers no greater or subtler
immunity on the award than plain speech. The need for speaking order, where
considerable numbers are affec.ted in their substantial rights, may well be a facet
of natural justice or fair procedure although in this case w~ do not have to go so
far.
The law sets no premium on juggling with drafting the award or hiding
the legal'. error. by blanking out. The inscrutable, face of the sphinx has no
better title to invulnerability than a speaking face which is a candid index of the
mind.
[190, ZOF-Hl
4. According to the arbitrators, the strike was illegal being in violation of
section 24 of the Act. the illegal strike was animated by inter-union power
struggle ,and that it inflicted loss on the management by forced closure and that
the loss flowing from the strike was liable to be
recompens~d by award of
damages. In this chain of reasoning the question of la\v whether an illegal
strike causing Joss of profit justifies award of damages is necessarily involved.
The arbitrator held in the affirmative and according to us it is an unhappy error
of la\v.
In the present case the arbitrators have made a sufficiently spe!lking
award both on facts and on law. After coming to the conclusion that the strike
was illegal the)' held that compensation necessarily follows based on the rule
of English common law. The English cases laying down the rule of common
law ·were a response to the requirement of Industrial civilization of the
19th
Century England. Trade and industry on the laissez faire doctrine flourished and
the law of torts, was shaped to serve the economic intere_sts of the trading and industrial community. Whatever the merits of the norms, violation of which
constituted 'conspiracy' in English Law, it is a problem for creative Indian Jurisprudence to consider how far a mere combination of men working for furthering
certain objective can be prohibited as a tort according to the Indian value system.
Our constitution guarantees the right to form associations, not for gregarious
pleasure, but to fight effectively for the redressal of grievances.
Our constitution
is sensitive to \Vorkers rights. English history, political theory and life style beiag different from Indian conditions where the Father of the Nation organised
boycotts and mass satyagrahas we cannot incorporate English conditions without
a_ny adaptation into Indian Law.
[21B-C, 22A, B-C, Dl
5.
Even in England, till recently it could not be said with any certainty that
there was any such tort as conspiracy. The tort is unusual
because it emphasizes the purpose of the defendants rather than the result of their conduct.
Even when, there are mixed motives liability will depend on ascertaining which
is the predominant object of the true motive or the real purpose of the defendant.
The motive of an illegal strike may be to advance the workers' interest or steal
a march over a rival union but never or rarely to destroy or damage the industry. However,\ if some individuals destroy th~ plant and machinery wilfully to
cause loss to the employer such individuals will be liable for the injury so caused.
Sabotage is no \Veapon in \\·orkers' legal armoury. It is absolutely plain that the
tort of conspiracy necessarily involves advertence to the object of the combina~
tion being the infliction of damage on the plaintiff. The strike may be illegal
but if the object is to bring the employer to terms with the employees or to bully
the rival trade union into submission there cannot be an actionable combination
in tort. In the present case, the arbitrators did not investigate_ the object of the
strike. The arbitrators assumed that if the strike is ille,gal the tort of consipracy
is made out. The counsel for the appellants fairly conceded that the object
of the strike was inter-union rivalry. There is thus a clear lapse in the law on
the part of the arbitrators manifest on the face of the award. [22F, 238-C, E,
H, & Z4A-BJ
6. It is common case that the demand for the wages during the strike period
constitutes an Industrial Dispute within section _2(k) of the Act. It is agreed by
both the sides that section 23 read with section 24 makes the strike in question
. illegal. An illegal strike is the creation of the statute and the remedy for the
illegal strike and its fall out has to be sought, within the statute and not de hors
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14
SUPREME COURT REPORTS
[1976] 3 S.C.R.
A
it.
No other relief outside the Act can be claimed -0ng~neral principles of
jurisprudence. The case of Prenu'er A11ton1obiles fo11owed. [25 B--C]
B
7.
The enforcement of a right or obligation under the Act must be by
a re1nedy provided in the Statute. The right of the management to claim compensation is not provided by the Act, and, therefore, the arbitrators Committed
an tx facie leral error. The consent of the parties cannot create arbitral jurisdiction under the Industrial Dispute~ Act.
The claim for compensation cannot
be a lawful subject for arbitration because it is not covered within the definition
of lndustrial Disputes in section 2(k). We are unable to imagine a tort of
liability or compensation based on loss of business being regarded as an industrial dispute as defined in thel Act. Section 33 C provides for speedy recovery
of money due to a workman from an employer under a settlement or award.
It does not provide for recovery of money by the employer from the workman.
Obviously because the workman belongs to the weaker section. Claims by employers against the \vorkmen on grounds of tortious liability have not found
a place in the pharmocopoeia of Indian Industrial L1w. [26 Dt 27A, C, D-E]
c
CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 1727-1728 of
1969.
r
Appeals by Special Leave from the Judgment and Order dated the
~
2nd May. 1962 of the Patna High Court of Judicature at Patna. in
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M.J.C. Nos. 475 and 498 of -1959.
A. B. N. Sinha, B. P. Maheshwari and Suresh Sethi for the Appellants (in both the appeals).
B. C. Chose, S.S. Jauhar, D. N. Pandey, A. Sinha and D. P. Mukherjee for Respondent 1 (In C.A. 1727) and Respondents 1-3 (In CA
1728).
-
D. P. Singh, S. C. Agarwal and V. J. Francis for respondents 7 and
8 (In CA 1727 and Respondent 4 in (1728/69).
The Judgment of the Court was delivered "by
KRISHNA IYER, J.-We permit ourselves a few preliminary observations disturbingly induced byi th<:> not altogether untypical circumstances
of these two appeals, before proceeding to state the facts, set out the
submissions and decide the points.
F
Industrial law in India has not fully lived up to the current challenges
of industrial life, both in the substantive norms or regulations binding
the three parties-the States, Management and Labour-and in the processual system which has baulked, by dawdling dysfunction, early finality and prompt remedy in a sensitive area where quick solution is of
thtj very essence of real justice. The legislative and judicial processes
have promises to keep if positive industrial peace, in tune with distribuG
tive economic justice and continuity of active production, were to be
accomplished. The architects of these processes will, we hopefully expect, fabricate creative changes in the system, normative and adjectival.
H
The two appeals before us, passported by special leave under Art. .
136, relate to an industrial dispute with its roots in 1948, meandering
along truce, union rivalry and the like, into strikes and settlements, the
last of which led to an arbitration award in 1959 which, in tum, prompted two writ petitions before the High Court. After a spell of a few
years they ripened into a judgment. Appeals to this Court followed
and, after long gestation of six years for preparation of papers and a
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ROHTAS INDUSTRIES v. STAFF UNION (Krishna Iyer, !.)
15
like period the cases are ready for final hearing or parturition, in all 12
A
years after the grant of leave. By this cumulative lapse of time the
generation of workers who struck work two decades ago have themselves
.all but retired, the representative Union itself which sponsored the dispute has, the other side faintly states, ceased to command representative
character, the Managements themselves have, out of many motives, disclaimed the intention to recover the huge sums awarded to them by the
arbitrators and the only survival after death, as it were, is a die-hard
B
litigation tied up to a few near-academic, but important, legal points for
adjudication by the highest Bench! On this elegiac note we will enter
the relevant area of facts and law since we must decide cases brought
before us, however stale the lis.
At this stage we may mention our strong feeling that where the
superior courts, after hearing full arguments, are clearly inclined to
affirm the judgment under appeal for substantially similar reasons as
have weighed with the lower Court, there is no need to give lengthy reasons for dismissing the appeal. Brevity, except in special cases, may
well fill the bill where the fate is dismissal. On this score we are disposed to make short shrift of the appeals with stating but the necessary
facts al1d focusing on the larger legal facets. Nevertheless, the significance and plurality of the points pressed have defeated condensation.
The facts
Two connected managements of industries in the same locality, who
figure as appellants before us, had a running industrial dispute with their
workers. which has had a long history moving in a zigzag course and
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sick.Jied over by alleged internecine trade-union strife. There were two
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trade unions which were perhaps of competitive strength and enjoying
·recognition. One of them, the Rohtas Industries Mazdoor Sangh (for
short, the Mazdoor 'Sangh) was the representative union during the
relevant period while the other, the Rohtas Industries Seva Sangh (for
brevity, the Seva Sangh) is not a party before this Court and so we are
not concerned with it except for the purpose of noticing its presence in
the settlement of the dispnte which starts the story so far as the litigation
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is concerned. There w~ a strike in the Industry (for our purposes this
expression embraces both the appellants) which came to an end by vir-
·tue of a memorandum of agreement dated October 2, 1957, to which
not merely the management but also the two registered unions aforementioned and the two un-registered unions which had a lesser following, were party. The terms of the said agreement provided inter alia
~U:
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"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 Sri J.
N. Majumdar and Sri 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
H
be final and binding on all the parties."
(Clause 7 of agreement)
"
16
SUPREME COURT REPORTS
[J 976] 3 S.C.R.
A
This agreement was admittedly arrived at during conciliation proceedings contemplated by the Industrial Disputes Act, 1947 (for short, the
Act) and the reference to arbitration ·spelt out in clause 7 directly and:.
admittedly fell under s. lOA of the Act.
It is apparent that the arbitrators were seised of two questions : (a)
the claim of the workers for wages for the period of strike; and (b)
B
the claim of the management for compensation for its losses fiowingfrom the strike. The Bo;i_rd of arbitrators, two retired Judges of the
Calcutta High Court-held extensive hearings spread over a .year and
a half, made a lengthy award marshalling the evidence, adducing the
reasons, discussing the. law and recording its decision on the two vital
issues. At the end of the detailed and reasoned record of conclusions,
the award runs thus :
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"Our award accordingly is:-
(1) That the workmen participating in the strike are not
entitled to wages and salaries for the period of the strike.
(2) That the company do recover from the workmen
participating in the strike, compensation assessed at lh. 80,000
(rupees eighty thousand).
(3) That the workmen jointly and severally do pay tv the
company one eighth of the total costs of the arbitration. In'
default of payment the company will be at liberty to recover
the same in such manner as it thinks fit. Subject to this the
parties do bear their respective costs.''
The workmen were deprived of their wages during the period of the
strike on the score that it was an illegal strike. Both sides seem to have
accepted this finding after an unsuccessful challenge in the High Court
and happily industrial peace is said to be prevailing currently. What did.
hurt the Mazdoor Sangh more and what the management did try to have
and to hold as a bonanza was the second finding that the strikers, apart
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from forfeiting wages, do pay compensation in the huge sum of
Rs. 6,90,000/- in one case and Rs. 80,000/- in the other, for the loss
of profits suffered by the manufacturing business of the management, a
pronouncement unusual even according to counsel for the appellant, although sustainable in law, according to him. For the workers this unique
direction of industrial law is fraught with ominous consternation and
dangerous detriment.
The Mazdoor Sangh challenged the award a•
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illegal and void by filing two writ petition! but the High Court quashed
that part of the award which directed payment of compensation by the
workers to the management and, as earlie_v pointed out, both sides have
chosen to abide by the award in relation to the denial of wages during
the strike period.
The Main Points Urged
H
The short but important issue, which has projected some seriouS'
questions of law, is as to whether the impugned part of the award has·
been rightly voided by the High Court.
We may as well formulate
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'ROHTAS INDUSTRIES v. STAFF UNION (Krishna Iyer, !.)
17
them but highlight the only major submission that merits close examinaA
tion, dealing with the rest with terse sufficiency. In logical order, counsel for the appellant urged that ( 1) (a) an award under s. 1 OA of the
Act savours of a private arbitration and is not amenable to correction
under Art. 226 of the Constitution. (b) Even if there be jurisdiction,
a discretionary desistence from its exercise is wise, proper and in consonance with the canons of restraint this Court has set down. (2) The
award of compensation by the arbitrators. suffers from no vice which can
IJ;,
be regarded as a recognisec\ ground for the High Court's interference.
(3) The view of law taken by the High Court on (i) the supposed flaw
in the award based on 'mixed motives' for the offending strike; (ii) the
exclusion of remedies other than under s. 26 of the Act; and (iii) the
implied immunity from all legal proceedings against strikers allegedly
arising from s. 18 of the Trade Unions Act, 1926 is wrong. A few other
incidental arguments have cropped up but the core contentions are what
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we have itemised above.
(1) (a) & (b)
'
The expansive and extraordinary power of the High Courts under
Art. 226 as wide as the amplitude of the language used indicates and
so can affect any person--even a private individual-and be available
D•
for any (other) purpose-even one for which another remedy may exist.
The amendment to Art. 226 in 1963 inserting Art. 226(1A) reiterates
the targets of the writ power as inclusive of any person by the expressive reference to 'the residence of such person'. But it is one thing to
affirm the jurisdiction, another to authorise its free exercise like a bull
in a china shop. This Court has spelt out wise and clear restraints on
the use of this extra-ordinary remedy and High Courts will not go beyond
E.
those wholesome inhibitions except where the monstrosity of the situation or other exceptional circumstances cry for timely judicial interdict
or mandate. The mentor of law is justice and a potent drug should be
judiciously administered., Speaking in critical retrospect and portentous
prospect, the writ power has, by ·and large, been the people's sentinel
on the qui vive and to cnt back on or liquidate that power may cast a:
peril to human rights. We hold that the award here is not beyond the
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legal reach of Art. 226, although this power must be kept in severer~
judicious leash.
Many rulings of the High Courts, pro and con, were cited before
us to show that an award under s. 1 OA of the Act is insulated from
interference under Art. 226 but we respectfully agree with tlie observations of Gajendragadkar J., (as he then was) in Engineering Mazdoor
G·
Sabha v. Hind Cycles Ltd(!1) which nail the argument against the existence of jurisdiction. The learned Judge clarified at p. 640 :
"Article 226 under which a writ of certiorari can be issued
in an appropriate case, is, in a sense, wider than Art. 136,
because the power conferred on the High Courts to issue certain writs is not conditioned or limited by the requirement that
the said writs can be issued only against the orders of Courts
n·
or Tribunals.
Under Art. 226(1 ), an appropriate writ can
(1)"[19631 Supp: I S.C.R. 625.
18
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SUPREME COURT REPORTS
[1976] 3 S.C.R.
be issued to any person or authority, including in appropriate
cases any Government, within the territories prescribed.
Therefore even if the arbitrator appointed under section lOA
is not a Tribunal under Art. 136 in a proper cases, a writ may
lie against his award under Art. 226".
(p. 640)
B
We agree that the position of an arbitrator under s. IOA of the Act
(as it then stood) vis a vis Art. 227 might have been different. Today,
however, such an arbitrator has power to bind even those who are not
parties to the reference or agreement and, the whole exercise under s.
lOA as well as the sonrce of the force of the award on publication derive
from the statute. It i~ legitimate to regard such an arbitrator now as
part of the methodology of the sove~eign's dispensation of justice, thus
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falling within the rainbow of statutory tribunals amenable to judicial review. , This observation made en passant by us is induced by the discussion at the bar and turns on the amendments to s. IOA and cognate
provisions like s. 23, by Act XXXVI of 1964.
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Should the Court invoke this high prerogative under Art. ~26 in the
present case ? That depends. W c will examine the grounds on which
the High Court bas, in the present case, excised a portion of the award
as illegal, keeping in mind the settled rules governing judicial review
of private arbitrator's awards. Suffice it to say, an award under s. IOA
is not only not invulnerable but more sensitively susceptible lo the writ
lancet being a quasi-statutory body's decision.
Admittedly, such an,
award can be upset if an apparent error of law stains its face.
The
distinction, in this area, between a private award and one under s. 1 OA
is fine, but real.
However it makes slight practical difference in the
present case; in other cases it may. The further grounds for iuvalidating an award need not be considered as enough unto the day is the
evil thereof.
(2) Tims, we arrive at a consideration of the appellants second submission, perhaps the most significant in the case, that the High Court
had no legitimate justification to jettison the compensation portion of
the award. Even here, we may state that counsel for the appellants,
right at the outset, mollified possible judicial apprehensions springing
from striking workers being held liable for Joss of management's profits
during the strike period by the assurance that his clients were inclined
to abandon realisation of the entire compensation, even if this Court upheld that part of the award in reversal of the judgment of the High Court
-a generous realism. He fought a battle for principle, not pecunia. We
record this welcome fact and proceed on that footing.
The relevant law which is beyond controvers)" now bas been clearly
stated in Halsbury's Laws of England thus :
.
"Error of law on the face of award : An arbitrator's
.award may be set aside for error of Jaw appearing on the face
of it, though the jurisdiction is not lightly to be exercised. . .
The jurisdiction is one that exists at common law independently of statute. Jn order to be a ground for setting aside the
award, an error in law on the face of the award must be such
that there can be found in the award, or in a document actually
/
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ROHTAS INDUSTRIES v. STAFF UNION (Krishna Iyer, /.)
incorporated with it, some legal proposition which is the basis
of the award and which is erroneous .
. . . . where the question referred for arbitration is a question of construction, which is, generally speaking, a question
of law, the arbitrator's decision cannot be set aside only because the court would itself have come to a different conclu19
sion; but if it appears on the face of the award that the arbitraB·
tor bas proceeded illegally, as for instance, by deciding on evidence which was not admissible, or on principles of construction which the law does not countenance, there is error in law
which may be ground for setting aside the award.
(para 623, p. 334, Vol. 2, Fourth Edn)
We adopt this as sound statement of the law. Not that English law
binds us but that the jurisprudence of judicial review in this branch is
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substantially common for Indian and Anglo-American systems and so
Halsbury has considerable persuasive value. The wider emergence of
common canons of judicial review is a welcome trend towards a oneworld public law. Indeed, this Court has relied on the leading English
decisions in several cases. We may content ourselves with adverting to
Bungo Steel Furniture( 1) and to the unreported decision Babu Ram(').
In simple terms, the Court has to ask itself whether the arbitraDo
tor has not tied himself down to an obviously unsound legal proposition in reaching his verdict as appears from the face of the
award.
Bhargava J., speaking for the majority, in Bungo Steel(') stated the
law:
I•
"It is now a well-settled principle that if an arbitrator, 'in
deciding a dispute before him, does not record his reasons and
does not indicate the principles of law on which he has proceeded, the award is not on that account vitiated. It is only
when the arbitrator proceeds to give his reasons or to lay
down principles on which he has arrived at his decisions that
the Court is competent to examine whether he bas proceeded
contrary to law and is entitled to interfere if such error in law
is apparent on the face of the award itself."
(p. 640--641)
In Bharat Barrel & Drum Manufacturing Co. (3) dealing with a private
award and the conditions necessary for exercise of writ jurisdiction to
correct an error of law apparent on the record, did not lay down the law
differently from what we have delineated.
In one of thn leading English cases Champsey Bhara & Co. ( 4) followed in India, Lord Dunedin defined 'error of law on the face of the
award' as 'where the question of law necessarily arises on the face of
the award or upon some paper accompanying and forming part of the
award' and said that then only the error of law therein would warrant
iudicial correction. The Law Lord expressed himself luscently when
lie stated :
F'
G
"An error in law on tl1e face of the award means, in their
ff
Lordships' view, that yon can find in the award ... some legal
-~-
~-~--
(l) [1967]1S.C.R.633.
(2) C.A. 107of1966 decided on 5-12-68.
(3) A.LR. 1967 S.C. 361.
(4) 50 I.A. 324.
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20
SUPREME COURT REPORTS
. [1976) 3 S.C.R;
proposition which is the basis of the award and which you can· - .
_then say is erroneous."
Williams J., in th'e case of Hodkinson v. Verne( 1) hit the nail on the
head by using the telling test as linnly ~stablished, viz., 'where the
question of law necessarily arises on th~ face of the award'. In this
view the enquiry by the Court before venturing to interfere is to ascertain whether an erroneous legal proposition is the basis of the award.
Nay, still Jess. Does a question of law (not even a proposition of law).
necessarily arise on the award followed by a tlawsome finding explicit
or visibly implicit ? Then. the Court can correct.
Tucker J., in James Clark (2) formulates the Jaw to mean that if the
award were founded on a finding which admits of ouly one proposition
of law as its foundation J!nd that law is erroneous on its face, the Court
has the power and, therefore, the duty to set right. While the Judge
cannot explore, by chasing, subterranean routes or ferret out by delving
deep what lies buried in the unspoken cerebration of the arbitrator and
interfere with the award on the discovery of an error of law by such
adventure, it is within his purview to look closely at the face of the award
to, discern the law on which the arbitrator has acted if it is transparent,
even transluscent but lingering between the lines or merely wearing a
verbal veil. If by such an intelligent inspection of the mien of the
award-which is an index of the mind of the author-an error of law
forming the basis of the verdict is directly disclosed, the decision is liable to judicial demolition. In lames Clark (2), the issue was posed with
considerable clarity and nicety. If, at its face value, the .award appears
to be based on an erroneous finding of law alone, it must fail.
The
clincher is that the factual conclusion involving a legal question must
necessarily be wrong in point of law. Even though the award contains '
no statement of the legal proposition; if the facts found raise 'a clear
point of law which is' erroneous on the face of it', the Court may rightly
hold that an error of law on the face of the award exists and invalidates.
Let us put the proposition more expressively and explicitly. What is
important is a question of law arising on the face of the facts found and
its resolution ex facie of sub silentio. The arbitrator may not state the
law as such. Even then such cute silence confers no greater or subtle(
immunity on the award than plain speech.
The need for a speaking
order, where considerable numbers arc affected in their substantial
rights, may well be a facet of natural justice or fair procedure, although;
. in this case, we do·not have to go so far. If, as here, you find an erroneous law as the necessary buckle between the facts found and the conclusions recorded, the award bears its condemnation on its bosom. Not
a reference in a narrative but a clear legal nexus between the facts and
the finding. The Jaw sets no premium on juggling with drafting the
award or hiding the legal error by blanking out. The inscrutable face
of the sphinx has no better title to invulnerability than a speak iog; face
which is a candid index of the mind. We may, by way asicle. express
hopefully the view that al minimal judicialisation by statemt/\t. laconic
or lengthy, of the essential law that guides the decision, is not only reasonable and desirable but has, over the ages, been observed by arbitra-
. tors and quasi-judicial tribunals as a norm of processual justice .. We
11) [1857] 3 C.B. (N.S.) 189,
(2) [1944] ! K.B. 566.
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ROHTAS INDUSTRIES v. STAFF UNION (Krishna Iyer, J.)
21
-do not dilate on this part of the argument as we are satisfied that be the
A
test the deeply embedded rules to issue certiorari or the traditional
_grounds to set aside an arbitration award 'thin partition do their bounds
-divide' on the facts and circumstances of the present case.
The decisive question now comes to thei fore. Did the arbitrators
.commit an error of law on the face of the award in the expanded sense
we have explained ? The basic facts found by the arbitrators are beyond
B
dispute and admit of a brief statement. We summarise the fact situation
:succinctly and fairly when we state that according to the arbitrators, the
strike in question was in violation of s. 24 of the Act and therefore ille_gal. This illegal strike animated by inter-union power struggle, inflicted
losses on the management by forced closure. The loss flowing from the
.strike was liable to be recompensed by award of damages. In this chain
.of reasouing is necessarily involved the question of law as to whether
C
.an illegal strike causing loss of profit is a de!ict justifying award of dam-
. .ages. The arbitrarors held, yes. We hold this to be an unhappy error
of law-loudly obtrusive on the face of the award. We may as well set
out, for the sake of assurance, the simple steps in the logic of the arbitrators best expressed in their own words which we excerpt :
·
"(a) It is argued that strike is a legitimate weapon in the
hands of workmen for redressal of their grievances and if they
are made liable for loss on account of strike then the basic idea
of strike as a means for having the grievances redressed will
be taken away. The fallacy in this argument is that it presupposes the strike not to be illegal and unjustified. In the present case we found the strikei to be otherwise. The workmen
have got no right of getting their grievances redressed by re·
:Sorting to illegal means which is an offence.
·
(b) It has been argued that the claim for compensation is
not an industrial dispute as defined in the Industrial Disputes
Act. Considering the issue of compensation in a water-tight
·compartment the argument might appear to be attractive. But,
in our opinion, in this case the claim for compensation by the
'company is a consequence flowing from an admitted industrial
dispute, which in this case is whether the strike was illegal
and/or unjustified and as against the condition of service as
laid down in the certified ·stanaing order en which point our
'fi_nding has been against the workmen ... "
•
The award of the Tribunal, in its totality, is quite prolix,
the
reasons stated in arguing out its conclusions many and thus it is just to
' stat·c that in the present case the arbitrators-two retired Judges of the
Cnlrntta High Court-have made a sufficiently speaking award both
on focts and on law.
They have referred to the strike being illegal
with specific reference to the provisions of the Act, but faulted themselves in law by upholding a case for
compensation as
axiomatic,
necessarlly based on a rule of common law i.e., English common law.
The rule of common law thns necessarily arising on the face of the
:awara is a dear question of law.
D
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D
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22
SUPREME COURT ~EPORTS
[1976) 3 S.C.R.
What is this rule of common law? Counsel for the appellanis.
inevitably relied on the tort of 'conspiracy' and referred us to Moghul
Steamship Co.( 1);
Allen v. Floor(");
Quinn v. Leathem( 3) and
Sorrel v. Smith ('). These decisions of the English Courts are
a
response to the societal requirements of the industrial civilisation of
the 19th Century England.
Trade and Industry on the laissez faire
doctrine flourished and the law of torts was shaped to serve the economic interests of the trading and industrial
community.
Political •
philosophy and economic necessity of the dominant class
animate
legal theory.
Naturally, the British law in this area protected business
from the operations of a combination of men, including workers, in
certain circumstances.
Whatever the merits of the norms, violation
of which constituted 'conspiracy' in English law, it is a problem
for creative Indian jurisprudence to consider, detached from anglophonic inclination, how far a mere combination of men working for
furthering certain objectives can be prohibited as a tort, according
to the Indian value system.
Our Constitution guarantees the right
to form associations, not for gregarious pleasure, but to fight effectively for the redressal of grievances.
Our Constitution is sensitive
to workers' rights.
Our story of freedom and social emancipation led
by the Father of the Nation has employed, from the highest of motives,
combined action to resist evil and to right wrong even if it meant loss
of business profits for the liquor vendor, the brothel-keeper and the
foreign-cloth dealer.
Without expatiating on these seminal factors,
we may observe that English history, political theory and life-style
being different from Indian conditions replete with organised boycotts
and mass satyagrahas, we cannot incorporate English torts without any
adaptation into Indian law.
A tort transplant into a social organism
is as complex and careful an operation as a heart-transplant into an
individual organism, law being life's instrumentality and rejection of
exotics being a natural tendency.
Here, judges are sociological surgeons.
Let us examine 'conspiracy' in the English Law of Torts to see
if even there it is possible to hold that an illegal strike per se spells
the wrong.
We may state that till recently it could not be said with
any certainty that there was any such tort as 'conspiracy'.
Salmond
thought that there was not (See Salmond-Law of Torts-p. 505,
15
Ed.). It is interesting that that in Edition of Salmond, Mogul is
linked up by the learned author with a capitalist economy.
Be that
as it may, the common law of England today is more or less clear,
some rumblings notwithstanding.
"A combination wilfully to do an act causing damage to a
man in his trade or other interests is unlawful and if damage
in fact is caused is actionable as a conspiracy.
To this
there is an exception where the defendants' real and predominant purpose is to advance their own lawful interests in a
matter in which they honestly believe that those interests
would directly
suffer if the action against the
plaintiff
was not taken. In truth, the Crofter case has made section 1
(!) [1892] A.C. 25.
(2) [18981 A.C. J.
(3) [1901] A.C. 495.
(4) [1925] A.C. 700.
!
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ROHTAS INDUSTRIES v·. STAFF UNION (Krishna Iyer, J.)
23
of the Trade Disputes Act, 1906, largely unnecessary, for
there will now be few conspiracies arising out of trade disputes wltich are not protected at conunon law."'
(pp. 508-509, 15th Edn., Sweet & Maxwell)
(emphasis,
ours)
The essence of actionable conspiracy is best brought out by Salmond :
"The tort is unusual because it emphasises the purpose
of the defendants rather than the results of their conduct."
(p.513, 15th Edn., Sweet & Maxwell)
(emphasis,
ours)
Even when there are mixed motives, 'liability will depend on ascertaining which is the predominant object or the true motive or the
real purpose of the defendant.
Mere combination or action, even
if it be by illegal strike, may be far away from a 'conspiracy' in. the
sense of the law because in all such cases, except
in conceivably
exceptional instances, the object or motive is to advance the workers'
interests or to steal a march over a rival union but never or rarely to ·
destroy or damage the industry.
It is difficult to fancy workers who
live by working in the industry combining to kill the goose that lays
the golden eggs.
The inevitable by-product of combination for cessasion of work may be loss to the rr.anagement but the obvious intendment of such a collective bargaining strategy is to force the employer
to accept the demand of the workers for betterment of their lot or
redressal of injustice, not to inflict dama~e on the boss.
In short, it
is far too recondite for an employer to urge that a strike, albeit illegal,
was motivated by destruction of the industry.
A
scorched
earth
policy may, in critical times of a war, be reluctantly adopted
by
a
people, but such an imputed motive is largely imaginary
in
strike
situations.
Ho\vever, we are clear in our minds that if some individuals destroy the plant or damage the machinery wilfully to cause Joss
to the employer, such individuals will be liable for the in jury so caused.
Sabotage is no weapon in workers' legal armoury ..
The leading case of Sorrel v.