Bombay High Court
Transport And Dock Workers' Union And ... vs Food Corporation Of Indian (Fci) And ... on 17 October, 1985
Equivalent citations: 1986(2)BOMCR305
JUDGMENT S.M. Daud, J.
1. This petition under Article 226 of the Constitution is aimed against a notification issued under section 4 of the Bombay Shops and Establishments Act, 1984 (hereinafter referred to as the "Shops Act") and the letter of instructions dated 2-4-85, issued by the Senior Regional Manager of respondent No. 1 to its District Managers, directing them to pay overtime allowance (CTA) to the employees as prescribed by the FCI/ Govt. of India from time to time.
2. The State legislature, passed the Shops Act with a view to consolidate and amend the law relating to the regulation of conditions of work and employment in shops, commercial establishments and other establishments, in the State of Maharashtra. Section 4 of the Shops Act empowers the State Government to exempt establishments from the operation of all or any of the provisions of the Act. Establishments so exempted, together with the extent of the exemption, are to be listed in Schedule II. Section 5 provides that establishments exempted and listed in Schedule II, may yet be rendered governable by some parts of the Act. The FCI which is respondent No. 1 to this petition, is an agent of the Government of India for the purpose of purchase and sale of food grains and fertilizers. It has establishments all over the country, including the State of Maharashtra. Initially, the FCI was subject to the Shops Act as a whole. Pursuant to representations made by it, the State Government issued a notification where under the FCI establishment was exempted from the operation of the Act, excepting the provisions of section 63, thereof. This was the erstwhile Entry No. 172 in Schedule II. The FCI went on petitioning the State Government for removing the fetter of section 63 also. This request was acceded to and respondent No. 2 issued the notification impugned here and published on 28-3-85. The notification is listed along with the petition at Exhibit 'A'. Briefly stated, as a result thereof, as from 28-3-85, the FCI establishments in Maharashtra are totally exempted from the provisions of the Shops Act. Close on the heels of the notification, the Senior Regional Manager of the FCI addressed a letter dated 2-4-85 (see Exhibit ''B') to the District Managers. Therein, the District Managers were informed of the notification at Exhibit 'A' and the entitlement of the FCI employees to be paid CTA as from 29-3-85 not under section 63 of the Act. But under instruction issued by the FCI /Govt. of India. The instruction currently in force are set out in Exhibit II which is an accompaniment to the affidavit-in-reply tendered on behalf of the FCI.
3. Petitioners who are a Union and two employees of the FCI, take exception to the aforementioned notification and letter. It is contended that the employees were not given a hearing before the notification was issued. This was despite the fact that it affected a vital right of their. The notification revealed a total non-application of mind. Facts and circumstances relevant for the payment of CTA, the rates thereof the reduction pursuant to Exhibit 'B' ,were all matters which required a notice to the employees. Because no notice was given, the FCI secured an unfair advantage. As a result of the letter, the FCI employees were being discriminated against in the matter of CTA vis-a-vis employees from the public and private sectors entitled to the benefits of the Shops Act. Thus, rights given to the FCI workers under Articles 14 and 16 of the Constitution, had been violated. The right to earn CTA at the rates prescribed by the Shops Act, was (sic) property and that had been taken away without a valid law, thus violating Article 300-A of the Constitution. Lastly, and assuming that the notification was valid, the FCI did not have the power to effect a change in the conditions of service by a mere letter which is sought at Exhibit 'B' . The procedure prescribed by section 9-A of the Industrial Disputes Act. 1947 ("ID Act ") had not been followed. Prior to the notification, CTA had been payable to the FCI employees at twice the ordinary rate of wages. This right had become absolute and had ripened into a condition of service. If it was to be taken away, the procedure prescribed by section 9-A had to be complied with. The notification by itself did not entitle the FCI to direct its District Managers to depends with payment of CTA as before. For all these reasons, petitioners graved for a with of certiorari to quash the notification and a direction to respondent No. 1 to refrain from acting upon the letter dated 2-4-85. Respondent No. 1 was to be further directed to ascertain and pay the CTA accruing to its employees as of yore (in times past).
4. Respondents in their affidavits-in-reply, have raised various contentions in answer to the petition. Petitioners' locus standi is questioned. Petitioner No. 1 was not the representative Union on the FCI workers and the workers cannot sue through either an unrepresentative Union or petitioner Nos. 2 and 3. In fact, the representative union has questioned the change in CTA rates before the competent Tribunal. On merits, it was to be remembered that the FCI was an instrumentality of the Union of India for the purposes of ensuring a fair price to the growers of food grain, side by side with the supply of essential articles to the consumers. Its operations extended to the entire country. With a view to ensure uniformity in the service conditions of the employees spread over the country, the FCI had been moving different regional Governments to dispense with the application of their legislation's pattered on the lines of the Shop's Act. It was a good case made out on merits, which led to the issue of the notification impugned by the petitioners. The employees of the FCI had not been left defenceless. They would still be getting CTA and at the rates and subject to the terms spelt out Exhibit II. Exhibit II governed CTA payable to employees of a number of Central Government departments and establishments. It could not be, therefore, said that FCI employees had been discriminated against. The notification assailed by the petitioners was a piece of legislation. Petitioners had no right to be heard before the same was promulgated it was not correct to say that original Entry No. 172 in the second schedule to the shops Act created a right to property in the employees of the FCI. Neither was it correct to say that the letter could not be acted upon, except after compliance with the procedure prescribed by section 9-A of the I.D. Act.
5. Contentions summarised above have given rise to points which are specified below. This enumeration will be succeeded by a discussion thereon:
(A) Is the impugned notification bad for want of notice to the employees of the FCI and non-application of mind to the facts and circumstances as claimed by the petitioner?
(B) Does the notification violate the rights of the Workmen of the FCI guaranteed under Articles 14, 16 and 300-A of the Constitution ?
(C) Does the letter dated 2-4-85 effect a change in violation of section 9-A of the I.D. Act?
(D) What order ?
6. The preliminary objections raised by the respondents will require a short discussion, though at the very outset, let me make it clear that there is no substance in them. The attacks on the locus standi of the petitioners does not survive after the according of the leave to them to sue in a representative capacity. Such leave has been accorded by us. As to the consequence of the recognised Union having moved the industrial Tribunal, all that we need to say is, that Tribunal could not have adjudicated upon the questions that arise in this petition. For one thing, the Tribunal could not have gone into the virus of the notification. This apart, on the grounds of expedition and efficaciousness, a writ petition is superior remedy vis-a-vis the long drawn out proceeding prescribed by the I.D. Act. Having repelled the preliminary objections, we will now turn to the attack upon the notification.
7. Mr. Bhatkal appearing for the petitioners, submits that having regard to the consequences ensuring from the issue of the notification, the 2nd respondent was under an obligation to give the FCI Workmen an opportunity to show cause against the exemptions sought by the FCI. To this, the respondents's short answer is that the notification constituted a piece of legislation and that in the matter of law-making, no one could insist upon a notice and hearing, before the law is formulate. Counsel for petitioners has shown a marked aversion to categorising the power exercised by the State Government when it issued the notification. This argument is developed by resort to the oft-repeated observation that whenever peoples rights are affected by a decision taken under statutory powers, Courts would presume the existence of a duty to observe the rules of natural justice. Implied in the argument advanced by Mr. Bhatkal, in the assumption that the powers given to the State Government under section 4 of the Shops Act is coupled with a duty, which is in the nature of an administrative powers, requiring it to follow, the principles of natural justice. Similar submissions have been raised on a number of occasions in the past. The Supreme Court in the Tulsipur Sugar Co. Ltd. v. Notified Area Committee, Tulsipur "The solution to the question raised before us principally depends upon the nature of the function that is performed by the State Government....... If that function is judicial or quasi-judicial involving adjudication of the rights of any person resulting in civil consequences, it no doubt becomes necessary to follow the maxim audi alteram partem (hear the other side) before taking a decision.... Exceptionally, a duty to act judicially may arise in the course of exercising a function not culminating in a binding decision, if the wording of the grant of powers or the context indicates that a fair hearing ought to be extended to persons likely to be prejudicially affected by an investigation or recommendation."
Forget the generalities in the aforementioned authority. There is also therein quoted with approval, the following passage from "Judicial Review of Administrative Action" by Prof. S. A. Smith to be found at page 163:
"However, the analytical classification of a function may be a conclusive factor in excluding the operation of the adui alteram partem rule. It is generally assumed that in English law the making of a subordinate legislative instrument need not be preceded by notice or hearing unless the parent Act so provides."
Now what is the nature of the power the State Government exercises when it issues notifications under section 4 of the Shops Act? The answer to this question is to be found in some reported decisions, the leading one being, Queen v. Burah, (1878)5 Indian Appeal 178. What fell for consideration in that case was a power given to the Lieutenant-Governor of Bengal to apply selectively various laws to different areas. Various challenges were taken to the power conferred upon the Lieutenant-Governor. However, the question then decided is of relevance to the present case. Analysing the legislation which conferred powers on the Lieutenant-Governor it was held:
"........The proper legislature has exercised this judgment as to place, person, laws, powers and the result of the judgment has been to legislate conditionally as to all these things. The conditions having been fulfilled, the legislation is now absolute...... Legislation, conditional on the use of the particular power, or an exercise of a limited discretion entrusted by a legislature to persons in whom it placed confidence, is no uncommon thing ; and in many circumstances, it may be highly convenient."
This passage has been quoted with approval repeatedly. In the Tulsipur Sugar Company's case, mentioned above, the provisions to be analysed was that permitting the State Government to declare any area as a "town area" rendering that area subject to the provisions of the U.P. Town Area Act. The Court says:
"The power of the State Government to make a declaration under section 3 of the Act is legislative in character because the application of the rest of the provisions of the Act to the geographical area which is declared as a town area is dependent upon such declaration. Section 3 of the Act is in the nature of a conditional legislation."
Again, in The Kerala State Electricity Board v. The Indian Aluminium Co. Ltd., . Legislation dealing with control of essential articles was assailed. Thereunder, the executive was empowered to pick up commodities for being treated as essential articles and made subject to the legislation. Exception was taken to this power conferred upon the executive. The majority of the Court speaking through Mr. Justice Alagiriswami held:
"........We are of the opinion that the power conferred by the Kerala Act is a case of conditional legislation as contemplated in the above decision. The various types of powers that can be exercised under that Act are enumerated in it. Only the articles with reference to which these powers are to be exercised is left to be determined by the executive. That will vary from time to time; at one time salt may be an essential article, at another time rice may be an essential article and on a third occasion match boxes."
More on the same lines is to be found in the judgments of 2 Division Benches of this Court reported in Saraswat Co-op Bank Ltd. v. P.G. Korane, and Writ Petition No. 706-A of 1982 the latter, having been decided by the Aurangabad Bench. The argument advanced by Mr. Bhatkal will thus have to be negatived. There is nothing in section 4 to compel the inference that a notice and hearing were required, once it is held that the notification constituted conditional legislation.
8. The next submission advanced by Mr. Bhatkal is that the notification reveals a total non-application of mind. The argument of non application of mind cannot be accepted for the basic reason given in K. Nagaraj v. State of Andhra Pradesh, . Though the decision relates to an Ordinance, it applies to all legislation, whether Ordinances, Acts or subordinate legislation. The passage reads thus:
"Therefore, though an ordinance can be invalidated for contravention of the constitutional limitations which exist upon the power of the State legislature to pass laws it declared invalid for reason of non-application of mind, any more than any other law can be. An executive act is liable to be struck down on the ground of non-application of mind. Not, the Act of a Legislature."
Our attention was drawn to the view of the Madras High Court reported in M.T. Mills v. State, . Under the Payment of Bonus Act, the State Government was conferred with certain discretion vide section 36. Kailasam, J., in that case held that the Government was not vested with an absolute discretion to grant exemption. To enable it to pass orders under section 36, it had to give reasons. The Government had to take into consideration the financial position and other relevant circumstances of the concerned establishment. We do not see that turns upon this decision. Surely it is not the law that every time conditional legislation is enacted, Government should encumber its files on the statute with reasons that led to the promulgation of the same.
9. To emphasis his point of non-application of the mind on the part of the 2nd respondent, Mr. Bhatkal to various tell-tale features. Says he, that by original Entry 172, the State Government itself had thought it necessary to subject the FCI to the liability to pay CTA at the rates prescribed by section 63 of the Act. Under this section CTA is payable at double the rate payable towards ordinary wages. Under Exhibit-II, not only is there a sharp reduction in rate, but what is more reprehensible, is that overtime beyond a certain limit is not to be paid for, though no employee is under a liberty a refuse to do overtime work. It is not for the Courts to question the wisdom of any legislation. If a fundamental right or any provision of the Constitution is violated, the courts have to strike down that violation. That is not the position here. The Shops Act confers upon the State Government the power to exclude, wither wholly or in part, any establishment. That power has been exercised by the State Government when it issued the impugned notification. The wisdom of the said exemption is not for us to comment upon.
10. Of course, there survives the submission that by issuing notification, the FCI employee are placed in a disadvantageous position vis-a-vis their brother in the other public and private concerns of the state. The following proposition referred in E.P. Royappa v. State of Tamil Nadu, can be pressed in favour of the submission advanced by Mr. Bhatkal:
"Articles 14 and 16 strike at arbitrariness in State action and ensure fairness and equality of treatment. They require that State action must be based on valid relevant principles applicable alike to all similarly situated and it must not be guided by any extraneous or irrelevant considerations because that would be denial of equality. Where the operative reason for State action as distinguished from motive including from the antechamber of the mind, is not, legitimate and relevant but is extraneous and outside the area of permissible considerations, it would amount to male fides exercise of power and that is bit by Articles 14 and 16."
There may be public sector undertaking which are subject, not only to section 63, but many more other onerous provisions of the Shops Act. But the power to exempt has been conferred upon the executive and once it is shown that relevant factors had been taken into consideration, it is not for the Court to interfere. Much was made of one-sided version placed by the FCI and the blind acceptance thereof by the State Government. The FCI had pleaded that it had to run establishments spread all over the country, that it wanted to enforce uniformity in the conditions of service of its employees, that different regions required different hours of work and that it had to keep down the element of subsidy from the public exchequer to the extent possible. For all these reasons, it wanted the abolition of the liability placed upon establishments by section 63 of the Shops Act. It is not possible for us to agree with the submission that a fair consideration of these factors by no means irrelevant to extraneous, required notice to the employees so that they would refute the contentions advanced by the FCI, or at least, show that the conditions spoken of by the FCI were of its own making and not the result of employee negligence or on account of the liability to pay fair wages to the workmen. If accepted, it would mean that before enacting legislation, the persons likely to be affected thereby should be noticed. As said earlier, the principle of notice and hearing proceeding law-making, is just not contemplated by our system of jurisprudence. Even administratively, it cannot be accepted that all parties likely to be affected by a legislation should be heard by the legislative body before it makes up its mind about the nature and character of the legislation proposed to be framed. The submission that CTA payable under section 63 of the Act had become property and that the same could not be taken away except by valid law has to be merely stated to furnish its own refutation. Admittedly, a valid law can taken away property vesting in a person. We have said earlier, that the impugned notification is within the powers conferred upon the State Government under the Shops Act. Therefore, there is a valid law which has taken away the so-called property right of the FCI workmen.
11. Having done with the Constitutional challenge raised vis-a-vis the notification, we now turn to that ground upon which, the petition will have to be allowed. This is that the notification by itself was not sufficient to warrant the issue of the letter at Exhibit 'B'. It merely enabled the FCI to take steps for getting rid of the liability to pay CTA at double the rate for ordinary wages. To effectuate its aim, the FCI had to further follow the procedure prescribed by section 9-A of the I.D. Act. This section in so far as it is relevant to this discussion, reads thus:---
"9-A. No employer, who proposes to effect any change in the conditions of service applicable to any workmen in respect of any matter specified in the Fourth Schedule shall effect such change.
(a) without giving to the workmen likely to be effected by such change a notice in the prescribed manner of the nature of the change proposed to the effected or
(b) within twenty-one days of giving such notice;
Provided that no notice shall be required for effecting any such change-
(a) where the change is effected in pursuance of any settlement or award:
(b) where the workmen likely to be affected by the change are persons to whom the Fundamental and Supplementary Rules, Civil Services (Classification, Control and Appeal) Rules, Civil Services (Temporary Service) Rules, Revised Leave Rules, Civil Services (Classification, Control and Appeal) Rules, or the Indian Railway Re-establishment Code or any other rules or regulations that may be notified in this behalf by the appropriate Government in the Official Gazette apply."
12. It is admitted that no notice of change as required by the earlier part of the section, was given. The submission is that this was enough to invalidate the letter at Exhibit 'B'. Reliance is placed upon (A.I.R. 1980 S.C. 2131) and . Respondents however, submit that section 9-A prescribes no more than a procedure for effecting a change. It does not create any extra or new right vide H. Shinde v. Industroal Tribunal, Bombay, . Counsel for the FCI points to the existence of rules and regulations framed by the FCI or the Government and adopted by the FCI for regulating the employment of its staff. It is submitted that once there be rules or regulation, governing workmen of the categories specified in proviso (b), the earlier part of the section does not apply, for which reason, no notice is required for effecting any change. Strangely enough, reliance is placed upon the following passage appearing in in support of the submission advanced.
"It is at this stage necessary to examine the implication of section 9-A of the I.D. Act, 1947. As hereinbefore pointed out, section 9-A makes it obligatory upon an employer who proposes to effect any change in the conditions of service applicable to any workman in respect of any matter specified in the Fourth Schedule to give a notice of desired or intended change. It cannot do so without giving to the workmen likely to be affected by the change, a notice in the prescribed manner of the nature of the change proposed to be effected and within 21 days of giving such notice. There is a proviso to section 9-A which has no relevance here. However, incidentally it may be pointed out that if the workmen likely to be effected by the change are persons to whom the Fundamental and Supplementary Rules, Civil Services (Classification, Control and Appeal) Rules, Civil Services (Temporary Service) Rules, Revised Leave Rules, Civil Service Regulation, Civilians in Defence Services (Classification, Control and Appeal) Rules or the Indian Railway Establishment Code or any other rules or regulations that may be notified in this behalf by the appropriate Government in the Official Gazette apply no notice of change. No attempt was made on behalf of the respondent-Corporation to urge that any of the aforementioned rules would govern the conditions of service of the workmen involved in the dispute. Now after introducing the direct payment system agreed to between the parties. If the Corporation or the employer wanted to introduce a change in respect of any of the matter set out in fourth Schedule, it was obligatory to give a notice of change. Item 1 in the Fourth Schedule provides 'wages, including the period and mode of payment'. By cancelling the direct payment system and introducing the contractor, both the wages and the mode of payment are being altered to the disadvantage of the workmen. Therefore, obviously a notice of change was a must before introducing the change, otherwise it would be an illegal change. Any such illegal change invites a penalty under section 31(2) of the I.D. Act, 1947. Such a change which is punishable as a criminal offence would obviously be an illegal change. It must be held that without anything more that such an illegal change would be wholly ineffective."
13. As we understand the passage, Counsel for the FCI before the Supreme Court did not even make the attempt to put forth the submission advanced before us and, this explains the following line, viz.
"There is a proviso to section 9-A which has no relevance here."
Surely, if section 9-A was excluded because of the existence of the rules and regulations governing the service conditions of employees, Counsel for the FCI before the Supreme Court would not have forgotten to place them before the Court. No. The rules and regulations contemplated by Clause (b) to the proviso, are those which relate to that "term of service" in which a change in sought to be effected. In other words, had there been rules or regulations governing the payment of CTA and had these been notified in the Official Gazette as being applicable after the issue of the notification at Exhibit 'A', the FCI would have been in a position to take recourse to Clause (b) to the proviso of section 9-A. But Exhibit 'B' was issued quick on the heels of the notification, without giving a notice of change as required by section 9-A. It is no answer to say that section 9-A lays down mere procedure. If mere procedure is the pre-condition for affecting a vested right, that vested right can be affected only by following the procedural requirement. To sum up, a mere executive direction or instruction could not take away from the workers their right ensuring to them, since prior to the coming into force of the notification impugned in this petition. That was only enabling legislation. To do away with the benefits that the workers had secured, it was further necessary to give a notice of change. That was the requirement of section 9-A of the ID Act. In the absence thereof, Exhibit 'B' lacks immunity from challenge passed by the petitioners.
14. The result is that the petition succeeds, though not on the constitutional grounds advanced. Having regard to the difficult and complex nature of the questions that fell for determination, we will leave the parties to bear their own costs. Hence the order.
ORDER Letter dated 2-4-85 issued by the Senior Regional Manager of respondent No. 1 to the District Managers, is hereby quashed. Respondent No. 1 shall not, through its officers and agents, pay CTA as mentioned in Exhibit 'B' unless a change is brought about after following the procedure prescribed by section 9-A of the Industrial Disputes Act, 1947. CTA of the FCI employees at the old rates shall be paid right from 29-3-85, and, until the change mentioned above, is effected. Parties shall bear their own costs. Rule in the above terms made absolute.