Karnataka High Court
Pandavapura Sahakara Sakkare ... vs The Presiding Officer, Additional I.T. on 25 February, 1992
Equivalent citations: ILR1996KAR2069
Bench: Chief Justice, Shivaraj Patil
ORDERS) ACT, 1946 (Central Act No. 20 of 1946) - Section 13(B) -- the Act a special law governing service conditions of establishments coming under the industrial laws in respect of matters enumerated in Schedule -- the Act does not apply only where exempted by notification under Section 13-B. (B) KARNATAKA CO-OPERATIVE SOCIETY ACT, 1959 (KARNATAKA ACT NO. 11 OF 1959) - Section 129(2)(o) governing service conditions of employees -- under Rule 18. (C) KARNATAKA CO-OPERATIVE SOCIETY RULES, 1960 -- Rule 18 fixing super-annuation age for its employees at 58 -- the workers having certified retirement age of 60years under the Standing Orders Act, held, entitled to the benefit of the latter which prevailed over the former, which was not specially notified under Section 13-B -- mere Gazette notification held, insufficient without being specifically notified under Section 13-B of the Standing Orders Act, 1946, which is not controlled by the former Act & Rules. THE FULL BENCH HELD : (1) The Act is Special Legislation dealing with the subject of conditions of service enumerated in the schedule to the Act, of workmen in industrial establishments; (2) Being a Special Act, its provisions override other law on the subject, covered by it, even if the industrial establishment in question is constituted or governed by such other law. (3) To exclude the operation of the Act to any extent, in respect of matters covered by some other rule or regulation, a specific notification under Section 13-B of the Act has to be issued and the appropriate Government should have applied its mind to the question of excluding the provisions of the Act to the particular industrial establishment. (4) A publication of a rule or a regulation in the gazette for a purpose other than Section 13-B of the Act by itself, cannot be treated as a Notification for the purpose of Section 13-B also. These principles flowing out of the decision of Supreme Court were not properly appreciated by the Court while deciding K.V.R. Shetty's case. ORDER K. Shivashankar Bhat, J.
1. The question referred to us for our opinion reads thus:
"Whether the fact that the State Government has framed rules regulating the conditions of service of officers and employees of co-operative societies established and functioning under the Karnataka Co-operative Societies Act, under Section 129(2)(o) of that Act, in which there is a rule prescribing the age of superannuation of officers and employees of a Co-operative Society and the rules have been published in the Official gazette, is sufficient to make the Industrial Employment Standing Orders Act inapplicable to the petitioner establishment by the force of Section 13-B of the said Act, even in the absence of publication of such rules by a specific notification - issued by the Government under Section 13-B of Industrial Employment (Standing Orders) Act?
2. The question arises because of an earlier Bench of this Court in K.V.R. SHETTY v. SECRETARY TO GOVERNMENT, HOME DEPARTMENT, KARNATAKA AND ORS., 1979(2) Kar. L.J.429, wherein it was held that the regulations having been notified once, they need not be again notified under Section 13-B of the Industrial Employments (Standing Orders) Act, 1946 (referred hereafter, either as the Act, or as the Standing Orders Act). Having regard to the decision of the Supreme Court in U.P. STATE ELECTRICITY BOARD v. HARI SHANKER, A.I.R. 1979 S.C. 65 a subsequent Bench disagreed with the correctness of this earlier view. Hence this reference.
3. The petitioner is a co-operative Society, carrying on the business of manufacture of sugar. There is also no dispute that it is an Industrial establishment covered by the provisions of the Act. Under the provisions of the Karnataka Co-operative Societies Act, 1959, rules were made to govern certain conditions of services of officers and employees of the Co-operatives. Rule 18 provides the age of retirement of an employee to be 58 years.
4. The Second Wage Board for Sugar Industries constituted by the Central Government submitted its report on 16th February 1970. Various recommendations were made regarding the improvements of conditions of service of the employees employed in the sugar factories in the Country. One of them was that gratuity was payable on attaining the age of superannuation at the age of 60 years, which necessarily implied that the age of superannuation of the workmen of the establishment of sugar factories should be 60 years. After the above recommendations came into force, the employees of the petitioner-factory began to agitate for increasing the age of superannuation of the workmen of the petitioner-industry from 58 to 60 years. It appears, that six workmen of the petitioner-factory raised a dispute that they were entitled to continue till the age of 60 years. The Government referred the dispute for adjudication to the Labour Court, which was Reference No. 20/78, which was rejected on 1-5-1988 on the ground that the age of superannuation of the employees of the petitioner-industry would be in "accordance with Rule 18 of the Rules, according to which they were liable to be retired at the age of 58 years. Subsequently, the employees also approached the Government for referring their dispute with the management that the age of superannuation should be raised to 60 years so as to bring it in conformity with the recommendations of the Second Wage Board for Sugar Industries. The learned Counsel for the workmen submitted that workmen did not themselves pursue the matter and accordingly reference was rejected on 1-5-1988. Thereafter, the workmen filed an application before the Certifying Officer under Section 10 of the Standing Orders Act on 8-8-1986. In the said application they prayed for the amendment of the Standing Orders by way of incorporating the rule of retirement providing for retirement of the workmen at the age of 60 years, i.e., in conformity with the recommendations of the Second Wage Board for Sugar Industries. This application was resisted by the petitioner on the ground that the age of superannuation of the petitioner-factory was governed by Rule 18 of the Rules. This objection was rejected and the Certifying Officer allowed the application on 14-10-1987. Aggrieved by the said order the petitioner preferred an appeal before the Industrial Tribunal under Section 6 of the Standing Orders Act. The Tribunal dismissed the appeal by its order dated 13th June, 1988. Against the order of the Appellate Authority and of the Certifying officer, the petitioner presented this writ petition. The writ petition was referred to Division Bench under Section 9 of the Karnataka High Court Act, 1961. The learned Counsel for the respondents had admitted that an earlier Division Bench Judgment of this Court in K.V.R. Shetty v. Secretary to Government, Home Department, Karnataka and Ors., which supported the contention of the petitioner required reconsideration, in the light of the Judgments of the Supreme Court. The Division Bench which heard the matter opined that the earlier decision in K.V.R. SHETTY's case requires reconsideration.
5. The petitioner-society contends that, by virtue of Section 13-B of the Act, the provisions of the Standing Orders Act are not applicable to it because the subject matter is already covered by Rule 18 of the Karnataka Co-operative Societies Rules 1960. The contention of the employees on the other hand is that the Government has not specifically notified the said Rules under Section 13-B of the Standing Orders Act and therefore, the provisions of the said Act continue to operate and the Rules made under the Karnataka Co-operative Societies Rules would not control the operation of the Standing Orders Act.
6. In the earlier decision rendered in K.V.R. SHETTY's case, a Division Bench of this Court held that the regulations made by the K.S.R.T.C. having already been published in the gazette, could be treated as also a Notification under Section 13-B of the Act and therefore nothing in the Standing Orders Act would apply to K.S.R.T.C. (which was the concerned establishment in the said case).
7. Section 13-B of the Standing Orders Act reads thus:
"13-B. ACT NOT TO APPLY TO CERTAIN INDUSTRIAL ESTABLISHMENTS:
Nothing in this Act shall apply to an industrial establishment in so far as the workmen employed therein 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 Regulations, Civilians in Defence Service (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.
8. In K.V.R. SHETTY's case the Bench was concerned with a Regulation made under the provisions of Road Transport Corporation Act. Regulation was made by the corporation under Section 45 of the above said Act; the State Government accorded sanction to the regulation; the order of the Government according sanction was published in the Gazette. The employees contended that, this publication of the order according sanction was different from the notification to be made under Section 13-B of the Act and according to them, there ought to have been two distinct notifications, one under the Act and another under the State Corporation Act according sanction to the Regulations. Since no such Notification under Section 13-B was issued, the provisions of the Act continued to operate and if so, the newly made Regulation would be invalid. The Bench did not accept this contention and observed at page 437:
"There is no reason why there should be two separate notifications one under Section 45 of the Act and another under Section 13-B of the standing Orders Act, and why only one notification cannot perform both the functions, firstly according previous sanction of the Government under Section 45 of the Act for the Regulations framed by the Corporations and secondly notifying those Regulations for the purpose of Section 13-B of the Standing orders Act."
9. Normally statutory rules and regulations require publication in gazette for their enforcement; this is a procedural requirement. Just because, such a notification is issued with the publication of the Rules in the Gazette, can it be said that it is also a notification under Section 13-B of the Act?
10. The Act provides for certification of the Standing Orders governing various conditions of services in a particular establishment. Certification is done after hearing the employer and the employees; further, the Certifying Officer has to be satisfied that the Standing Order is fair and reasonable. Necessarily, the test of fairness and reasonableness would be with reference to the circumstances of the particular establishment including the nature of the industry and the working conditions prevalent in such an industry.
11. The Bench, in K.V.R. SHETTY's case, purported to rely oh the decision of the Supreme Court in U.P. State Electricity Board v. Hari Shanker, for its conclusion. With utmost respect we find that, the Bench in the said case missed a few relevant observations as to the scope of Section 13B of the Act. At page 73 the Supreme Court observed:
"Shri Garg relied on certain observations of the Madras High Court in RAMAN NAMBISSAN v. STATE ELECTRICITY BOARD [(1967) 1 Lab LJ 252] and THIRUVENKATASWAMY v. COIMBATORE MUNICIPALITY [(1968) 1 Lab LJ 361] : (1968 Lab IC 1567). In Raman Nambissan's case it was held that mere fact that the Electricity Board had adopted the rules and regulations of the Government of Madras as its transitory rules and regulations did not bring the workman employed in industrial establishments under the Board within the mischief of Section 13-B of the Industrial Employment (Standing Orders) Act. In Thiruvenkataswamy's case, it was held that rules made by the Government under the District Municipalities Act could not be considered to be rules notified under Section 13-B of the Standing Orders Act merely because the rules were made by the Government and published in the Government Gazette. We agree with the conclusions in both cases. In Thiruvenkataswami's case Kailasam J. also observed that the Industrial Employment (Standing Orders) Act was a special Act relating exclusively to the service conditions of persons employed in industrial establishment, and, therefore, its provisions prevailed over the provisions of the District Municipalities Act. We entirely agree." (Underlining is by us).
12. From the above, it is clear that merely because the rules were made by the Government and published in the Gazette, it cannot be considered as a notification under Section 13-B of the Act. If the intention is to notify the rule or regulations under Section 13-B, said intention has to be expressed properly.
13. In the said case, the Supreme Court found as a fact that the regulation under Section 79(c) of the Electricity (Supply) Act, 1948 was notified under Section 13-B also; said notification is found at page 68 (A.I.R. 1979 S.C.65). The reasons for this requirement are found at page 71, wherein the Supreme Court observed.
"The Industrial Employment (Standing Orders) Act is thus seen to be an Act specially designed to define the terms of employment of workman in industrial establishments to give the workmen a collective voice in defining the terms of employment and to subject the terms of employment to the scrutiny of quasi-judicial authorities by the application of the test of fairness and reasonableness. It is an Act giving recognition and form to hard-won and precious rights of workmen. We have no hesitation in saying that it is a Special Act expressly and exclusively dealing with the schedule-enumerated conditions of service of workmen in industrial establishments."
Further, at page 72, Supreme Court held -
"We have already shown that the Industrial Employment (Standing Orders) Act is a Special Act dealing with a specific Subjects, namely the Conditions of Service, enumerated in the Schedule, of workmen in industrial establishments. It is impossible to conceive that Parliament sought to abrogate the provisions of the Industrial Employment (Standing Orders) Act embodying as they do hard-won and precious rights of workmen and prescribing as they do an elaborate procedure, including a quasi-judicial determination, by a general, incidental provision like Section 79(c) of the Electricity (Supply) Act. It is obvious that Parliament did not have before it the Standing Orders Act when it passed the Electricity (Supply) Act and Parliament never meant that the Standing Orders Act should stand protanto repealed by Section 79(c) of the Electricity (Supply) Act. We are clearly of the view that the provisions of the Standing Orders Act must prevail over Section 79(c) of the Electricity (Supply) Act in regard to matters to which the Standing Orders Act applies."
14. Even though the Notification specifically mentioned Section 13-B of the Act, the Supreme Court examined the question further to see whether actually, the State Government had applied its mind to the requirement of notifying the regulation under Section 13-B (vide para 13 at page 73).
15. From the above decision, following principles emerge : (1) The Act is Special Legislation dealing with the subject of conditions of service enumerated in the schedule to the Act, of workmen in industrial establishments; (2) Being a Special Act, its provisions over-ride other law on the subject, covered by it, even if the industrial establishment in question is constituted or governed by such other law. (3) To exclude the operation of the Act to any extent, in respect of matters covered by some other rule or regulation, a specific notification under Section 13-B of the Act has to be issued and the appropriate Government should have applied its mind to the question of excluding the provisions of the Act to the particular industrial establishment. (4) A publication of a rule or a regulation in the gazette for a purpose other than Section 13-B of the Act by itself, cannot be treated as a Notification for the purpose of Section 13-B also. These principles flowing out of the decision of Supreme Court were not properly appreciated by the Court while deciding K.V.R. SHETTY's case.
16. The Act envisages finalisation of a standing order only after hearing the affected parties like the employer and employee, and only after the Certifying Officer is satisfied that it is fair and reasonable. There is also a provision for appeal to a higher authority against the order of the, Certifying Officer. A built-in machinery under the Act looks after the requirement of regulating the conditions of service of the workmen in the establishment covered by the Act.
17. A rule made under the provisions of Co-operative Societies Act, is a rule of general application. It does not consider the individual cases and therefore there is no scope for the rule to provide for the circumstances prevailing in a particular industry, like a sugar industry. Co-operative Societies may engage themselves in different kinds of trade or industry, like wholesale or retail business in groceries, cloth, agricultural commodities, or may be formed to carry on banking business etc. Some of them may be formed to carry on industrial activities also. It cannot be said all these societies should always be governed by a uniform set of working conditions with reference to their employees. This situation is met by the Act which provides for a separate set of standing orders governing conditions of service of the employees in any particular industrial establishment.
18. When the Act governs a particular establishment, and its provisions have over-riding effect in the matter of conditions of service enumerated in the schedule to the Act, it will be necessary to have a clear manifestation of intention by the appropriate Government to exclude the said provisions from being applied to a particular establishment. Normal rule is to cover the establishment by the Act; exclusion is to be an exception. Therefore, such an exclusion should be notified clearly and unequivocally.
19. We are of the view that the decision in K.V.R. SHETTY's Case does not reflect the correct law as laid down by the Supreme Court in U.P.S.E. BOARD'S case and accordingly we over-rule the decision in K.V.R. SHETTY's case. Since Rule 18 of the Cooperative Societies Rules was not specifically notified with reference to Section 13-B of the Standing Orders Act, said rules would not exclude the operation of the Standing Orders Act in respect of the matters covered by the said Rule 18. Therefore, we answer the question referred to us in the negative.