East India Industries (Madras) Ltd. vs The Industrial Tribunal, Fort St. George, Madras and Another

Rajamannar, C.J.—This appeal against the Judgment of Rajagopala Aiyangar J., arises out of a reference by the Gov ernment to the

Industrial Tribunal, Madras, for adjudication of a dispute between the workers and the management of the East India Industries (Madras) Ltd., in

respect of the discharge of one A.K. Gopal. Gopal was a time-keeper in the company''s factory till 6-3-1951, when he was transferred to the

Stores Department. He apparently took this transfer as a de-promotion and enquired from the management on what ground he had been thus

published. . The management replied that the transfer did not involve any de-promotion. On the allegation that Gopal refused to do the new work

assigned to him, the management dismissed him by their order dated 14-3-1951. The General Industrial Workers'' Union, of workers in the

establishment of the company, raised a dispute regarding the justification of the dismissal of Gopal. It was suggested that the dismissal was due to

the fact that he was the Secretary of the Union.

It was this dispute that was referred by the Government for adjudication to the Industrial Tribunal, Madras. On an enquiry, the Industrial Tribunal

held that Gopal was not discharged for any just or sufficient reasons or in a valid manner and that he should be reinstated and all arrears of wages,

allowances, etc., due to him should be paid. On these findings, the Tribunal passed an award on 13-11-1951 directing the management to reinstate

the employee, A. K. Gopal, in the position occupied by him on 14-3-1951, and to pay him all the arrears of salary and allowances due to him till

the date of reinstatement. This award was duly published by the Government in the Fort St.. George Gazette. The management of the company

thereupon filed a writ petition No. 836 of 1951, praying that the records before the Industrial Tribunal on the above reference may be called for

and the award passed therein may be quashed.

Before Rajagopala Aiyangar J., three contentions were raised by Sri. M.K. Nambiar, namely, (1) that Gopal was not a ""workman"", within the

meaning of the Industrial Disputes Act. and consequently the reference by the Government was Invalid. (2) that the direction to reinstate. Gopal

was beyond the powers of the Tribunal, and (3) that if the Tribunal had such power, the reinstatement would infringe on the fundamental right

guaranteed under Art. 19(1)(g) of the Constitution and could not be deemed to be a reasonable restriction in the interests of the public within the

meaning of Article 19(6), The learned Judge overruled all the three contentions and dismissed the writ petition. Hence the appeal.

Before us Mr. M. K. Nambiar, learned counsel for the appellant, did not press again the first contention that Gopal was not a workman"" within

the meaning of the Industrial Disputes Act. The second contention is, in our opinion, no longer open to him in view of the decision or this court in -

Sri. C. Baktavatsalu Nayudu, Industrial Tribunal, Madura at the Commercial Tax Officer Vs. The Chrome Leather Co. Ltd. and Another, and the

decision of the Federal Court in - ''Western India Automobile Association v. Industrial Tribunal, Bombay AIR 1949 PC 111 (B), which affirmed

the decision of a Division Bench of the Bombay High Court.

We are left with the third contention based on the provisions of the Constitution. A preliminary objection was raised on behalf of the workmen

that the company was not entitled to the benefits of the fundamental rights guaranteed by Article 19, because the company would not be a ""citizen

within the meaning of the Constitution. In the opinion of Rajagopala Aiyangar J. this objection was well founded because a limited liability company

would not be a ""citizen"" within the meaning of the Constitution and therefore could not claim the benefit of the freedoms enumerated in Article 19.

It is not necessary to deal with this point, as in our opinion the appellant must fail even assuming that Article 18 can be applied to a company.

In the first place, we are not convinced that an award directing the reinstatement of a dismissed workman fn any way curtails the freedom

guaranteed to a citizen under Article 19(1)(g)| of the Constitution. The appellant''s right to carry on its business as such is not in any way Interfered

with by such an award. When a dismissed workman challenges the validity of the dismissal aid the matter is adjudicated upon by an Industrial

Tribunal and the Tribunal arrives at the conclusion that the dismissal was not valid, the position is that the workman must be deemed never to have

been dismissed at all and, BO continues in service. It may be that an ordinary court of law would-only award damages to the dismissed workman.

But nothing prevents the Tribunal from giving the alternative relief of a declaration that the dismissal was wrongful and the consequential relief that

he be continued In service.

The argument on behalf of the employer usually is that he cannot be compelled to employ any one against his will. But the proper way of looking at

it is that an employer is not allowed to terminate the services of a workman except in a lawful manner. The following observations of Mahajan J. as

he then was, in AIR 1949 FC 3 (B). are. apposite in this connection: ""This relief of- reinstatement is on the flame footing as a relief of restitution.

Restitution can be granted in integrum In certain cases. All that is required is that the ex-employee should be restored to his previous position sO

far as capacity; status and emoluments, are concerned and there is nothing extraordinary in such restoration being ordered when considered

necessary in the interests of peaceful settlement of Industrial disputes. Adjudication does not, in our opinion, mean adjudication according to the

strict law of master and Servant The award of the Tribunal may contain provisions for settlement of a dispute which no. Court could, order if it was

bound by ordinary law, but the ""Tribunal is not fettered in any way by these limitations.

Even on the assumption that a direction to reinstate a dismissed workman infringes the freedom to carry on business, there can be no doubt that

it would be a reasonable restriction on the exercise of the right in the interests of the general public. In --. Indian Metal and Metallurgical

Corporation Vs. Industrial Tribunal, Madras and Another, , it was pointed out by a Division Bench of which one of us was a member, , that the

right conferred by Article 19(1)(g) to carry on business is not absolute, that the State has got the right to regulate any business and that in the

interests of a large section of the public, namely, industrial workers, the legislature may provide, whether directly or indirectly through administrative

bodies, for the fixing of reasonable and adequate wages and generally regulate the conditions of service. It was said that,

In the absence of a guarantee of the freedom .of contract, we do not think it unreasonable to presume that the freedom of contract can, to a

certain extent, be curtailed if such curtailment is reasonable and in the general interests of the general public. This may be necessary In regard to the

relationship between the employer and employees in a large industrial concern, where ''it is clear that the contracting parties, namely, the employer

and the employee do not stand on the same level.

In -- Dindigal Skin Merchants'' Association and Others Vs. The Industrial Tribunal, Madurai and Others, , Subba Rao J., as He then was,

followed this decision. He found it Impossible to held that legislation in India to bring about harmonious relationship between the employers and the

employees in the interests of industrial peace is an unreasonable restriction upon the fundamental right guaranteed under Article 19(1)(g) of the

Constitution. Indeed, according to him, the Industrial Disputes Act, by providing a machinery to smoothen out the disputes between the employers

and employees enabled the employer to carry on his trade or business mote effectively than otherwise he could do. (Vide also the observations of

Venkatarama-Aiyar J. in -- Santhanakrishna Odayar Vs. Vaithilingam and Others, , where he refers to labour laws which provide not merely

minimum wages for labourers - but also for their reinstatement in"" ceases of improper dismissal).

Mr. M. K. Nambiar, learned counsel for the appellants, relied on two decisions of the Supreme Court of the United States. But these decisions

are of no assistance to us, as they are as much based on the conception of freedom of contract guaranteed to the citizens of the States as on the

right to carry on business. In --Adair v. United States'', (1907) 52 Law Ed. 436 (F), a law which made it a criminal offence for an officer of an

inter State carrier to"" discharge an employee from service because of his membership in a labour organisation, was struck down as inconsistent

with the Constitution, because the provision was an invasion of the personal liberty as well as the right of property guaranteed by the Fifth

Amendment. Harlan J. said: ""Such liberty and right embrace the right to . make contracts for the purchase of the labour of others and equally the

right to make contracts for the sale of one''s own labour."" The following citation was made from -- ''Lochner'' v. New York'', (1904) 49 Law Ed.

937 (G) :

The general right to make a contract in relation to .his business is part of the liberty of the individual protected by the 14th Amendment of the

Federal Constitution......... The, right to purchase or to sell labour is part of the liberty protected by this Amendment, unless there are

circumstances which exclude the right''.

In -- ''Coppage v. Kansas'', (1914) 59 Law Ed 441 (H), the , same principle was enunciated. A similar piece of legislation was impugned in that

case, and the court observed:

If freedom of contract is to be preserved an employer must be left at liberty to decide for himself whether such membership (of a labour

organisation) by his employee is consistent with the satisfactory performance of the duties of the employment.

It is interesting to notice the court expressing the following opinion, when pressed with the inequalities between the employer and employee: ""No

doubt, wherever, the right of private property exists, there must and will be inequalities of fortune; and thus it naturally happens that parties

negotiating about a contract are not equally unhampered by circumstances. This applies to all contracts, and not merely to that between employer

and employee. And, since it is self-evident that, unless all things are held in common, some persons must have more property than others, it is from

the nature of things impossible to uphold the freedom of contract and the right of private property without at the same time recognising as legitimate

those inequalities of fortune that are the necessary result of the exercise of those rights."" This view is obviously opposed to the fundamental

principles on which our Constitution is based.

We are in entire agreement with the opinion of Rajsgopala Aiyangar J. that the reinstatement of a worker might be needed to restore industrial

peace between the management and the employees as a body; and would therefore be a reasonable restriction in the interests of the general public.

In this view, it Is unnecessary to deal with the question whether the award of the Tribunal is a law within Sub-clause (3) of Article 13 of the

Constitution. The appeal fails and is dismissed with costs (Rs. 200).W. A. No. 89 of 1954: No separate arguments were addressed in this appeal,

which is also dismissed. No costs.