Wednesday, June 30, 2010



DATED: 21.01.2010



W.P.No.15406 of 2000

The Railway Employees Cooperative
Credit Society Ltd., (Reg.No.52/1907)
Southern Railway Office
Chennai 3 represented by
its Secretary .. Petitioner

The Joint Commissioner of Labour
Labour Welfare Board buildings
6th floor, D.M.S.Compound
Chennai 6 .. Respondents

Prayer : Petition under Article 226 of the Constitution of India praying for a Writ of Certiorari calling for the impugned order of the respondent made in Letter No.B/612/2000 dated 24.8.2000 and quash the same.

For Petitioner :: Mr.R.Muthukumarasamy,
Senior counsel for Mr.A.Jenasenan

For Respondents :: Mrs.C.K.Vishnu Priya, AGP


Heard both sides.

2. It is an irony that a Society run by the Railway workers has chosen to challenge a communication sent by the Labour Department of the State Government. It is a known history that the Railway workers fought for many labour rights over one century. Yet a Society run by them are attempting to deny legal rights by stalling the application of certified Standing Orders to their workers by filing the Writ Petition and getting a stay of the impugned communication for over a decade. The impugned communication sent by the respondent is nothing but a directive to the petitioner to get their Standing Orders certified for their workmen.

3. It is seen from the records that the General Secretary of the All India Multi State Societies' employees Association, Chennai had sent a letter to the state labour department dated 24.1.2000 complaining that the petitioner society had not got a certified standing orders in terms of the Industrial Employment (Standing Orders) Act, 1946 (for short 'Standing Orders Act').
4. The first respondent after seeking the comments from the petitioner society sent the impugned proceedings dated 24.8.2000. The petitioner society was informed that it comes within the control of the state government and that the provisions of the Standing Orders Act will apply to them. They were asked to take appropriate steps to get standing orders certified for their establishment under the Standing Orders Act. It is this communication which is challenged in this Writ Petition.

5. This Writ Petition was filed in the year 2000. It is an abuse of law that the petitioner society did not implead either the trade union functioning in the Society or the persons who made the complaint to the labour department regarding the non-certification of the standing orders. On the contrary they had got an interim stay of the communication on 30.9.2000, which is also continuing over the last 10 years thanks to lethargy of the respondent.

6. A Counter affidavit dated 28.04.2003 has been filed by the respondents justifying the application of the Standing Orders Act to the petitioner society.

7. Mr.R.Muthukumarasamy, learned senior counsel leading Mr. A.Jenasenan, for the petitioner raised the following contentions:
i) Provisions of the Standing Orders Act will not apply to the petitioner Society as it is a multi-state Co.operative society registered under the Multi State Cooperative Societies Act, 1984.
ii) the appropriate Government in respect of such a society is the 'Central Government' and therefore the respondent herein has no jurisdiction to send the impugned communication.
iii) under the Multi-State Cooperative Societies Act, 1984, more particularly under Section 42(2)(e), the Board of Directors of the Society is empowered to deal with making regulations for regulating appointment of employees of the Multi-State Cooperative Society, the scales of pay, allowances and other conditions of service including disciplinary action against such employees. Since the Regulations have been framed by the Board, there was no necessity to make any standing orders certified for their establishment. The existing regulations are satisfactory and are enough to deal with the employees.
(iv) The petitioner was also informed by the authorities at Delhi that they need not get any Standing Orders certified under the Act. But the learned Senior Counsel fairly stated that the petitioner society never obtained any exemption from the Standing Orders Act, 1946 in terms of Section 13-B either from the Central Government or from the Tamil Nadu Government.

8. The question that arises for consideration is whether the impugned communication is legally valid and the petitioner society was obliged to have certified the standing orders for their establishment.

9. The contentions raised by the learned senior counsel for the petitioner does not merit any acceptance. In respect of a multi-state Cooperative society, the appropriate Government is only the State Government as had been held by the Supreme Court vide its judgment in Bharat Coop.Bank (Mumbai) Ltd. vs. Coop.Bank Employees Union reported in (2007) 4 SCC 685. The following passage found in paragraph 30 may be usefully extracted below:

"30. For all these reasons, we have no hesitation in upholding the view taken by the High Court that for the purpose of deciding as to which is the "appropriate Government", within the meaning of Section 2(a) of the ID Act, the definition of the "banking company" will have to be read as it existed on the date of insertion of Section 2(bb) and so read, the "appropriate Government" in relation to a multi-State cooperative bank, carrying on business in more than one State, would be the State Government."

10. The learned senior counsel for the petitioner submitted that the petitioner society is not an industrial establishment coming within the meaning of Section 2(e) of the Standing Orders Act. Even that submission is not valid. Section 2(e)(i) of the Industrial Employment (Standing Orders) Act, 1946 reads as follows:

(e) "industrial establishment'" means
(i) an industrial establishment as defined in clause (ii) of Section 2 of the Payment of Wages Act,1936 (4 of 1936)"

11. Under the Payment of Wages Act, 1936, the State Legislature had introduced an amendment by Tamil Nadu Act 5 of 1959. By the said amendment Section 2(h) of the Payment of Wages Act was substituted and it reads as follows:

"(h) establishment or undertaking which the State Government may, by notification in the official Gazette, declare to be an industrial establishment for the purposes of this Act."

12. By virtue of the power vested under Section 2(h) of the Payment of Wages Act, the State Government has issued the following notification vide G.O.Ms.No.128, Labour Department dated 24.1.1986. The said notification reads as follows:
"No.II (2) LAB/1135/86 . In exercise of the powers conferred by sub-clause (h) of clause (ii) of Section 2 of the Payment of Wages Act,1936 (Central Act IV of 1936), the Governor of Tamil Nadu hereby declares the commercial establishments as defined in clause (3) of Section 2 of the Tamil Nadu Shops and Establishments Act, 1947 (Tamil Nadu Act XXXVI of 1947), employing 20 or more persons as Industrial Establishment for the purpose of the Act."
It is needless to state that the petitioner Society is a commercial establishment within the meaning of Section 2(3) of the Tamil Nadu Shops and Establishment Act, 1947.

13. When once it is held that the petitioner is an "industrial establishment" under the Payment of Wages Act, then automatically Section 2(e)(1) of the Standing Orders Act will get attracted. To get over that legal hurdle, the learned senior counsel submitted that the petitioner is a multi-state cooperative society and the appropriate Government can only be the Central Government. Therefore, the state amendment will have no relevance. Such an argument is not available, in the light of the Supremen Court's decision in Bharat Cooperative Bank (Mumbai)'s case (cited supra). Therefore, there is no illegality or infirmity in the communication sent by the respondent.

14. The learned senior counsel also submitted that Regulations under 42(2)(e) are already applicable to the employees. Hence, there is no necessity to frame any certified standing orders for the establishment. Such a contention is impermissible because insofar as having Certified standing orders are concerned, the provisions of the Standing Orders Act will prevail as it is a special law. The petitioner relying upon the regulations framed by its own Board of Directors and raise it to the level of a statutory regulation cannot be countenanced by this Court. On the contrary if the standing orders apply to an establishment and if the employer do not get a certified standing order, then by virtue of Section 12-A of the Standing Orders Act, the model standing orders framed by the Tamil Nadu Government will apply to the employees of the petitioner society.

15. The purpose of framing Standing Orders came to be considered by the Supreme Court vide its decision in Western India Match Company Ltd., vs. Workmen reported in 1973 (2) LLJ 403. The following passage found in paragraph 10 of the Judgment may be usefully extracted below:-
"10. In the sunny days of the market economy theory people sincerely believed that the economic law of demand and supply in the labour market would settle a mutually beneficial bargain between the employer and the workman. Such a bargain, they took it for granted, would secure fair terms and conditions of employment to the workman. This law they venerated as natural law. They had an abiding faith in the unity (sic) of this law. But the exercise of the working of this law over a long period has belied their faith. Later generations discovered that the workmen did not possess adequate bargaining strength to secure fair terms and conditions of service. When the workmen also made this discovery, they organised themselves in trade unions and insisted on collective bargaining with the employer. The advent of trade unions and collective bargaining created new problems of maintaining industrial peace and production for the society. It was, therefore, considered that the society has also an interest in the settlement of the terms of employment of industrial labour. While formerly there were two parties at the negotiating table, the employer and the workman, it is now thought that there should also be present a third party, the State, as representing the interest of the society. The Act gives effect to this new thinking. By S.4 the officer certifying the standing order is directed to adjudicate upon "the fairness or reasonableness" of the provisions of the standing order. The certifying officer is the statutory representative of the society. It seems to us that while adjudging the fairness or reasonableness of any standing order, the certifying officer should consider and weigh the social interest in the claims of the employer and the social interest in the demands of the workmen...".
While the regulations have been unilaterally framed by the Board, but in framing the Certified Standing Order, the workmen can have a say and the Certifying Officer under the Act is mandated to see its reasonableness before granting his certification.

16. The Supreme Court vide its judgment in Co.operative Central Bank Limited vs. Additional Industrial Tribunal and others reported in 1969 (2) LLJ 698 has held that the bye-laws framed by a society is only in the nature of contract and that cannot curtail the adjudicating authorities under the Industrial Disputes Act to modify those terms. It is necessary to refer to the following passage found in page 707 of the said Judgment.
"....We are unable to accept the submission that the bylaws of a cooperative society framed in pursuance of the provisions of the Act can be held to be law or to have the force of law. It has no doubt been held that, if a statute gives power to a Government or other authority to make rules, the rules so framed have the force of statute and are to be deemed to be incorporated as a part of the statute. That principle, however, does not apply to bylaws of the nature that a co.operative society is empowered by the Act to make. The bylaws that are contemplated by the Act can be merely those which govern the internal management, business or administration of a society. They may be binding between the persons affected by them, but they do not have the force of a statute. In respect of bylaws laying down conditions of service of the employees of a society, the bylaws would be binding between the society and the employees just in the same manner as conditions of service laid down by contract between the parties. In fact, after such bylaws laying down the conditions of service are made and any person enters the employment of a society, those conditions of service will have to be treated as conditions accepted by the employee when entering the service and will thus bind him like conditions of service specifically forming part of the contract of service. The bylaws that can be framed by a society under the Act are similar in nature to the articles of association of a company incorporated under the Companies Act and such articles of association have never been held to have the force of law....". (Emphasis added)

Hence the adjudication by a Labour Court or the Certification of the Standing Orders cannot be subordinated for the bylaws framed by the Board of the petitioner society.

17. Further, the Supreme Court vide its judgment in Life Insurance Corporation of India vs. D.J.Bahadur reported in 1981 (1) SCC 315 has held that if there are two central enactments, even though one central enactment may be a special law for the purpose for which it was established, insofar as the service conditions of workmen are concerned, it is only the labour law that will prevail.
The following passages found in paras 31, 52 and 57 may be usefully extracted below:-
31. If there is no dispute, the ID Act is out of bounds, while the LIC Act applies generally to all employees from the fattest executive to the frailest manual worker and has no concern with industrial disputes. The former is a war measure as it were; the latter is a routine power when swords are not drawn if we may put it metaphorically. When disputes break out or are brewing, a special, sensitive situation fraught with frayed tempers and fighting postures springs into existence, calling for special rules of control, conciliatory machinery, demilitarising strategies and methods of investigation, interim arrangements and final solutions, governed by special criteria for promoting industrial peace and justice. The LIC Act is not a law for employment or disputes arising therefrom, but a nationalisation measure which incidentally, like in any general takeover legislation, provides for recruitment, transfers, promotions and the like. It is special vis-a-vis nationalisation of life insurance but general regarding contracts of employment or acquiring office buildings. Emergency measures are special, for sure. Regular nationalisation statutes are general even if they incidentally refer to conditions of service.

52. In determining whether a statute is a special or a general one, the focus must be on the principal subject-matter plus the particular perspective. For certain purposes, an Act may be general and for certain other purposes it may be special and we cannot blur distinctions when dealing with finer points of law. In law, we have a cosmos of relativity, not absolutes so too in life. The ID Act is a special statute devoted wholly to investigation and settlement of industrial disputes which provides definitionally for the nature of industrial disputes coming within its ambit. It creates an infrastructure for investigation into, solution of and adjudication upon industrial disputes. It also provides the necessary machinery for enforcement of awards and settlements. From alpha to omega the ID Act has one special mission the resolution of industrial disputes through specialised agencies according to specialised procedures and with special reference to the weaker categories of employees coming within the definition of workmen. Therefore, with reference to industrial disputes between employers and workmen, the ID Act is a special statute, and the LIC Act does not speak at all with specific reference to workmen. On the other hand, its powers relate to the general aspects of nationalisation, of management when private businesses are nationalised and a plurality of problems which, incidentally, involve transfer of service of existing employees of insurers. The workmen qua workmen and industrial disputes between workmen and the employer as such, are beyond the orbit of and have no specific or special place in the scheme of the LIC Act. And whenever there was a dispute between workmen and management the ID Act mechanism was resorted to.

57. What is special or general is wholly a creature of the subject and context and may vary with situation, circumstances and angle of vision. Law is no abstraction but realises itself in the living setting of actualities. Which is a special provision and which general, depends on the specific problem, the topic for decision, not the broad rubric nor any rule of thumb. The peaceful coexistence of both legislations is best achieved, if that be feasible, by allowing to each its allotted field for play. Sense and sensibility, not mechanical rigidity gives the flexible solution. It is difficult for me to think that when the entire industrial field, even covering municipalities, universities, research councils and the like, is regulated in the critical area of industrial disputes by the ID Act, Parliament would have provided an oasis for the Corporation where labour demands can be unilaterally ignored. The general words in Sections 11 and 49 must be read contextually as not covering industrial disputes between the workmen and the Corporation. Lord Haldane had, for instance, in 1915 AC 885 (891)434 observed that:535
General words may in certain cases properly be interpreted as having a meaning or scope other than the literal or usual meaning. They may be so interpreted where the scheme appearing from the language of the legislature, read in its entirety, points to consistency as requiring modification of what would be the meaning apart from any context, or apart from the general law.
To avoid absurdity and injustice by judicial servitude to interpretative literality is a function of the court and this leaves me no option but to hold that the ID Act holds where disputes erupt and the LIC Act guides where other matters are concerned. In the field of statutory interpretation there are no inflexible formulae or foolproof mechanisms. The sense and sensibility, the setting and the scheme, the perspective and the purpose these help the Judge navigate towards the harbour of true intendment and meaning. The legal dynamics of social justice also guide the court in statutes of the type we are interpreting. These plural considerations lead me to the conclusion that the ID Act is a special statute when industrial disputes, awards and settlements are the topic of controversy, as here. There may be other matters where the LIC Act vis-a-vis the other statutes will be a special law. I am not concerned with such hypothetical situations now."

18. Therefore, in respect of the Industrial Employment (Standing Orders) Act for framing the standing orders relating to service conditions of workmen is the special law occupying the field. The contention that bylaws/regulations framed by the Board under Section 42(2)(e) of the Multi-State Cooperative Societies Act, 1984 or under the subsequent enactment cannot have an overriding effect as held by the Supreme Court in LIC's case (cited supra).

19. The said legal position was reiterated by a Division Bench of this Court in The Tamil Nadu Water Supply and Drainage Board vs. M.D.Vijayakumar reported in 1991 (1) LLJ 260. The following passage found in paragraph 7 may be usefully extracted below:-
"7.....The principles laid down by the Supreme Court in U.P. State Electricity Board vs. Hari Shankar Jain (supra) and Bagianathan, S vs.The Secretary to Government of Tamil Nadu etc. (supra) are applicable to the facts of the present case and we fully agree with the conclusion of the learned Single Judge that the Act of 1946 is a special law vis-a-vis regulations framed under the general law viz., the Tamil nadu Act IV of 1971, and it will prevail over the regulations framed by the respondent-Board in exercise of the powers conferred under Section 73 of the Act IV of 1971. The learned Single Judge also rightly held that the respondent-Board is an 'industrial establishment' within the meaning of Section 2(e)(i) of the Act of 1946, that the regulations framed by the respondent-Board in exercise of the powers under Section 73 of the Act IV of 1971 will not be applicable to the workmen governed by the Act of 1946 and that the disciplinary action taken by the respondent Board against the workmen based on the regulations have to be struck down".
The said decision was upheld by the Supreme Court also.

20. In the light of the above,the contentions raised by the petitioner society cannot be accepted. The Writ Petition is therefore dismissed both on the ground of non-joinder of parties as well as on merits.

21. Since the petitioner society had stalled the application of the standing orders to the workmen in its establishment by filing such frivolous writ petition, the Writ Petition has to be dismissed with costs. Therefore, cost of Rs.5,000/- (Rupees five thousand only) is ordered against the petitioner society. In the present case, the workers are not before this Court. Therefore, the petitioner society is directed to credit the said amount to the Tamil Nadu Labour Welfare Fund created under the Tamil Nadu Welfare Fund Act, 1972 within a period of four weeks from the date of receipt of a copy of this order.



The Joint Commissioner of Labour
Labour Welfare Board buildings
6th floor, D.M.S.Compound
Chennai 6

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