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CASE NO.:

Appeal (civil) 3337-3338 of 2002

PETITIONER:

CHAIRMAN S.B.I. & ANR.

Vs.

RESPONDENT:

ALALSSOORCIISASTAIOSNTA&TEORBSA.NK OFFICERS

DATE OF JUDGMENT: 06/05/2002

BENCH:

D.P. Mohapatra & K.G. Balakrishnan

JUDGMENT:

D.P.MOHAPATRA,J.

Leave is granted.

These appeals filed by the Chairman, State Bank of

India, Central Office, Mumbai and the Chief General

Manager, State Bank of India, Local Head Office at

Bhubaneshwar are directed against the judgment dated

24.11.1998 of the High Court of Orissa in OJC No.

8863/1997 and the Order dated 23.7.1999 disposing of the

petition for review of the said judgment, Civil Review

No.15/99, filed by the appellants. The operative portion of

the judgment dated 24.11.98 reads as follows:

"For the foregoing reasons we set aside

paragraph 2 of the Staff Circular No.91

of 1987 if the same is still in force and

direct the opposite parties to confer

such rights on the petitioner-

Association as are available to them

under Rule 24 of the Verification Rules.

The Management of the State Bank of

India are also directed to keep in mind

the observations made in this

judgment while dealing with its

employees, officers and their Unions,

recognized or unrecognized."

The High Court, allowing the review petition in

part by the order dated 23rd July, 1999, issued the

following directions :

"For the aforesaid reasons, in partial

modification of the judgment dated

24.11.1998, we pass the following

order:-

(i) We set aside paragraph 2 of the

Staff Circular No.91 of 1987 if the

same is still in force and direct

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the management of the Bank to

permit the writ petitioners-

Association to meet and discuss

the grievances of any individual

member of the petitioner-

Association relating to his service

conditions in a regulated

prescribed manner and further to

appear on behalf of its members

in any domestic or departmental

enquiry or in any proceeding

before the Conciliation Officer,

Labour Court, Industrial Tribunal

or any other Tribunal.

(ii) The management of the Bank will

be at liberty to take such suitable

disciplinary action as permissible

in law if any individual employee

or officer or office bearer of any

Union or Association including

the writ petitioner Association,

recognized or unrecognized,

indulge in any coercive or

intimidating or indisciplined acts

or behaviour.

(iii) We also direct the management of

the State Bank of India to keep in

mind the relevant observations

made in the judgment dated

24.11.1998 and also in this order

while dealing with its employees,

officers and their Unions,

recognized or unrecognized.

The review is allowed in part to the

extent indicated above."

In the circular, Staff Circular No.91 of 1987 dated

13-11-1987 which was under challenge in the writ

petition, it was stated that the bank does not enter into

any dialogue etc. with a non-recognized union/

association; that the bank has recognized the All India

State Bank Officers' Association for this circle; the said

rights and privileges cannot be extended to any other

association of the Officers in the same circle.

Para 2 of the Staff Circular No.91 of 1987 which was

struck down by the High Court, reads as follows:

"Having regard to very serious

developments as brought out in our

Staff Circulars Nos. 84 and 90 of 1987,

it will not be in order for any Bank

functionary to enter into any dialogue

or accept any representation from the

office-bearers of the unrecognized All

Orissa State Bank Officers' Association

in this Circle, even in matters

pertaining to individual grievances. In

case the representatives of the above

unrecognized Association resort to any

coercive methods like dharna, gherao

etc. decisions obtained, if any, under

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such circumstances would be deemed

to have been taken under duress and

such decisions shall not be binding on

the Bank. Needless to add that the

cases of officers indulging in such

unwarranted actions would be dealt

with sternly and suitable disciplinary

action would be taken against them."

From the judgment under challenge it is clear that

the controversy raised in the case relates to the rights of

the All Orissa State Bank Officers' Association (a non-

recognised association), respondent no.1 herein, vis-a-vis

the Management of the Bank, to espouse the case of the

officers of the Bank with the management of the bank;

whether the respondent association has any such right

or the rights are vested only in a recognized association,

the All India State Bank Officers' Federation/Association.

The respondent No.1 Association represented

through its General Secretary, filed the writ petition

raising grievance against unjust, unfair and hostile

treatment towards its members and claiming treatment at

par with office-bearers of the recognized association, and

prayed that norms for guidance in matters relating to a

non-recognized association may be laid down by the

Court. It does not appear to have been disputed before

the High Court and it was also not disputed in this Court

that a non-recognized association is a registered

association under the Trade Unions Act. The

management of the Bank has not recognized the said

association. According to the Bank, the association does

not satisfy the criteria laid down by the Verification of

Membership and Recognition of Trade Unions' Rules,

1994 (hereinafter referred to as 'the Verification Rules')

framed by the Government of Orissa. The non-recognized

association pleaded that in 1982 the association

submitted a list of its members and claimed recognition,

but in spite of recommendation of the Officer-in-charge of

the local Head Office, the Central Office at Bombay did

not take any decision and started adopting unfair labour

practice to encourage defection from the petitioner's

association to the recognized association. The non-

recognized association also alleged that members of the

recognized association are being shown illegal and undue

favour in the matter of posting, transfer, entertainment or

representations whereas the members of the non-

recognized association are being put to various

inconveniences in a systematic and calculated manner.

Certain instances were stated in the writ application in

support of the allegation of hostile discrimination and

unfair treatment.

The Chief General Manager in the local Head Office

at Bhubaneshwar, respondent No.2 herein, in his counter

affidavit denied the allegations of discrimination,

arbitrary treatment and unfair practice. However, he

referred to certain rights and privileges allowed to

members of recognized association and asserted that only

such rights and privileges were not being extended to the

office-bearers of the non-recognized association. He

refuted the claim of the non-recognized association for

parity of treatment with members and office bearers of

the recognized association.

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The High Court in para 5 of the judgment observed,

"Admittedly, the verification of membership and

recognition of Trade Union Rules, 1994 framed by the

State of Orissa are applicable to the petitioner-

Association". Thereafter the High Court took note of the

provisions in Rule 18 in which it is laid down that the

Union which secures not less than 30% of the total

number of votes polled shall be entitled to be recognized

and considered. The provision of Rule 24 in which are

enumerated the rights of a non-recognized union is

quoted herein below :

"24 (a) Rights of Unrecognised

Union to meet and discuss with

the employer or any person

appointed by him in that behalf

the grievances of any individual

member relating to his service

conditions.

(b) To appear on behalf of its

members employed in the

establishment in any

domestic or departmental

enquiry held by the

employer and before the

Conciliation Officer/Labour

Court/Industrial Tribunal

or Arbitrator."

The High Court also took note of Rules 21 and 23 in

which are enumerated the rights and facilities of

recognized unions. The High Court observed that the

petitioner association (respondent no.1) is still a non-

recognized union and it is not possible for the Court in

exercise of writ jurisdiction to determine the dispute over

membership and that, when a statutory machinery is

available it is for the non-recognized association to avail of

that machinery in accordance with the prescribed

procedure. Dealing with the question of the right of the

non-recognized association to speak on behalf of its

members, the High Court observed that a non-recognized

union has no right to represent the entire workmen but it

has the right to represent those who are its members,

individually or as a group of workmen; acceptance of a

demand and discussion over a demand is not the one and

same thing; right of raising grievance and discussion is a

fundamental right and cannot be taken away totally. The

High Court drew a distinction between acceptance of a

demand and discussion over the demand. The High Court

placed reliance on the principles laid down and

observations made by this Court in Balmer Lawrie

Workers' Union, Bombay & Anr. vs. Balmer Lawrie & Co.

Ltd. & Ors. [(1985) 2 SCR 492). The High Court held that

the staff circular No.91/1987 on the face of it is contrary

to Rule 24 of the Verification Rules and also violative of the

rights forming the basis of a domestic society, and that

the management of the Bank cannot direct its officers not

to enter into any dialogue or accept any representation

from the non-recognized union even in matters pertaining

to individual grievances. In para 9 of the Judgment the

High Court summed up its conclusions on the point in the

following words:

"Mr. Dora, learned Advocate appearing

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for the Bank and its management fairly

submits that there cannot be any

direction contrary to Rule 24 of the

Verification Rules. Thus the direction

contained in para 2 of the Staff

Circular No.91 of 1987 is arbitrary,

contrary to Rule 24 of the Verification

Rules and liable to be set aside."

Dealing with the allegations of discrimination or

unfair labour practice etc. the High Court recorded the

following findings in para 11 of its judgment:

"However, on the basis of the materials

produced before us, we are unable to

hold that there is any deliberate or

consistent policy of discrimination or

unfair labour practice against the

members of the petitioner Association.

In the affidavits filed on behalf of the

management almost all the instances

given by the petitioner-Association

have been specifically dealt with and

answered. There is no sufficient

material from which we can

conclusively hold any systematic

victimization or harassment of the

members of petitioner-Association."

The High Court also took note of the submissions

made on behalf of the management of the Bank that

excepting the specified office bearers of the recognized

Association or Union all other officers of the bank are

entitled to be treated equally in accordance with the

Bank's administrative policy irrespective of their union

affiliation. On the above findings and observations the

High Court allowed the writ petition.

Coming to the order passed on the review petition

filed by the appellants it appears that the main grounds

urged in support of the prayer for review of the judgment

were that the Verification Rules framed by the Govt. of

Orissa were not applicable to the Officers of the Bank

since they are not 'employees' within the meaning of Rule

3 (c) of the Verification Rules, and that the Court had

erred in quashing para 2 of the Staff Circular No.91 of

1987 dated 13.11.1987 which is applicable on All India

basis, since that would amount to disturbing a long

standing All India Policy of the Bank. Considering the

first ground, the High Court observed that the

submission appears to be correct although during

hearing of the writ application it was clearly stated that

the said Rules are applicable. The High Court expressed

its inability to give any finding on the point in the

absence of sufficient material before it. However, the High

Court further observed "so we are inclined to accept the

contention that the Verification Rules as such will not

cover a Union which is not a union of workmen as

defined in the Industrial Disputes Act". The further

observation of the High Court was that although Rule 24

of the Verification Rules in terms does not apply to a

union of officers who are not 'workmen' but the principle

behind the Rule can be extended to any non-recognized

union even if it is not a union of workmen. Dealing with

the allegation made by the non-recognized association

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regarding discrimination against its members and office-

bearers, the High Court reiterated that though the

Verification Rules as such do not apply to the petitioner's

association if it is not a union of workmen as defined

under the Industrial Disputes Act, if any individual

employee or officer of a union or association of employees

or officers including petitioners association recognized or

not indulge in any disorderly or indisciplined or

intimidating acts or behaviour, the management is at

liberty to take such action as is permissible in law.

The High Court disposed of the Review Petition by

passing the judgment/order which has been quoted

earlier.

With growth of industrialization in the country and

progress made in the field of trade union activities the

necessity for having multiple unions in an industry has

been felt very often. Taking note of this position power

has been vested in the management to recognize one of

the trade unions for the purpose of having discussions

and negotiations in labour related matters. This

arrangement is in recognition of the right of collective

bargaining of workmen/employees in an industry. To

avoid arbitrariness, bias and favouritism in the matter of

recognition of a trade union Rules have been framed

laying down the procedure for ascertaining which of the

trade unions commands support of majority of

workmen/employees. Such procedure is for the benefit

of the workmen/employees as well as the management/

employer since collective bargaining with a trade union

having the support of majority of workmen will help in

maintaining industrial peace and will help smooth

functioning of the establishment. Taking note of the

possibility of multiple trade unions coming into existence

in the industry, provisions have been made in the Rules

conceding certain rights to non-recognized unions.

Though such non-recognized unions may not have the

right to participate in the process of collective bargaining

with the management/employer over issues concerning

the workmen in general, they have the right to meet and

discuss with the employer or any person appointed by

him on issues relating to grievances of any individual

member regarding his service conditions and to appear

on behalf of their members in any domestic or

departmental enquiry held by the employer or before the

conciliation officer or labour court or industrial tribunal.

In essence, the distinction between the two categories of

trade unions is that while the recognized union has the

right to participate in the discussions/negotiations

regarding general issues affecting all workmen/

employees and settlement if any arrived at as a result of

such discussion/negotiations is binding on all

workmen/employees, whereas a non-recognized union

cannot claim such a right, but it has the right to meet

and discuss with the management/employer about the

grievances of any individual member relating to his

service conditions and to represent an individual member

in domestic inquiry or departmental inquiry and

proceedings before the conciliation officer and

adjudicator. The very fact that certain rights are vested

in a non-recognized union shows that the Trade Union

Act and the Rules framed thereunder acknowledge the

existence of a non-recognised union. Such a union is not

superfluous entity and it has a relevance in specific

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matters relating to administration of the establishment. It

follows, therefore, that the management/employer

cannot outrightly refuse to have any discussion with a

non-recognized union in matters relating to service

conditions of individual members and other matters

incidental thereto. It is relevant to note here that the

right of the citizens of this country to form an association

or union is recognized under the Constitution in Article

19(1)(c). It is also to be kept in mind that for the sake of

industrial peace and proper administration of the

industry it is necessary for the management to seek

cooperation of the entire work force. The management by

its conduct should not give an impression as if it favours

a certain sections of its employees to the exclusion of

others which, to say the least, will not be conducive to

industrial peace and smooth management. Whether

negotiation relating to a particular issue is necessary to

be made with representatives of the recognized union

alone or relating to certain matters concerning individual

workmen it will be fruitful to have

discussion/negotiations with a non-recognized union of

which those individual workmen/employees are members

is for the management or its representative at the spot to

decide. At the cost of repetition we may state that it has

to be kept in mind that the arrangement is intended to

help in resolving the issue raised on behalf of the

workmen and will assist the management in avoiding

industrial unrest. The management should act in a

manner which helps in uniting its workmen/employees

and not give an impression of a divisive force out to

create differences and distrust amongst workmen and

employees. Judged in this light the contents of

paragraph 2 of the Staff Circular No.91 of 1987 clearly

give an impression that the management has decided at

the threshold before being aware of the nature of the

dispute raised that its representatives should have no

discussion at all with office bearers of the non-recognized

association. Such a circular is not only contrary to the

express provision in Rule 24 but also runs counter to the

scheme of the Trade Union Act and the Rules.

In the case of Balmer Lawrie Workers' Union

(supra), this Court, reviewing the scheme of the

Maharashtra Recognition of Trade Unions and Prevention

of Unfair Practices Act, 1971, traced the history of

development of trade-unions on the advent of industrial

revolution and the need for multiple trade-unions in

industries and consequential necessity for selecting one

of the trade-unions as the recognised union by the

management, and also took note of the difference

between the rights and privileges of a recognized trade-

union and a non-recognised trade-union. In that

connection, this Court made certain observations,

portions of which are extracted hereunder:

"A need was felt that where there are

multiple unions seeking to represent

workmen in an undertaking or in an

industry, a concept of recognized,

union must be developed. Standing

Labour Committee of the Union of

India at its 29th Session held in July

1970 addressed itself to the question of

recognition of trade union by the

employer. In fact even amongst trade

union leaders there was near

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unanimity that the concept of

recognized union as the sole

bargaining agent must be developed in

the larger interest of industrial peace

and harmony. National Commission

on Labour chaired by late Shri P.B.

Gajendragadkar, former Chief Justice

of India, after unanimously and

wholeheartedly expressing itself in

favour of the concept of recognized

union and it being clothed with

powers of sole bargaining agent with

exclusive right to represent workmen,

addressed itself only to the question of

the method of ascertaining which

amongst various rival unions must be

accorded the status of a recognized

union. Planting itself firmly in favour of

democratic principle, it was agreed that

the union which represents the largest

number of workmen working in the

undertaking must acquire the status

as that would be in tune with the

concept of industrial democracy."

xxx xxx xxx

"Before the introduction of Sec.2-A in

the Industrial Disputes Act, 1947 the

courts leaned in favour of the view that

individual dispute cannot be

comprehended in the expression

'industrial dispute' as defined in the

Industrial Disputes Act, 1947. Any

dispute not espoused by the union for

the general benefit of all workmen or a

sizeable segment of them would not be

comprehended in the expression

'industrial dispute' was the courts'

view. Often an invidious situation

arose out of this legal conundrum. An

individual workman if punished by the

employer and if he was not a member

of the recognized union, the latter was

very reluctant to espouse the cause of

such stray workman and the individual

workman was without a remedy.

Cases came to light where the

recognized union by devious means

compelled the workmen to be its

member before it would espouse their

causes. The trade union tyranny was

taken note of by the legislature and

Sec.2-A was introduced in the

Industrial Disputes Act, 1947 by which

it was made distinctly clear that the

discharge, dismissal retrenchment or

termination of service of the individual

workman would be an industrial

dispute notwithstanding that no other

workman or any union of workman is

a party to the dispute. Sec.20, sub-

sec.2 while conferring exclusive right

on the recognized union to represent

workmen in any proceeding under the

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Industrial Disputes Act, 1947

simultaneously denying the right to be

represented by any individual

workman has taken care to retain the

exception as enacted in Sec.2A. This

legal position is reiterated in Sec.20(2)

(b). Therefore while interpreting

Sec.20(2)(b) it must be kept in view

that an individual workman, who has

his individual dispute with the

employer arising out of his dismissal,

discharge, retrenchment or termination

of service will not suffer any

disadvantage if any recognized union

would not espouse his case and he will

be able to pursue his remedy under the

Industrial Disputes Act, 1947. Once

this protection is assured, let us see

whether the status to represent

workmen conferred on a recognized

union to the exclusion of any

individual workman or one or two

workmen and who are not members of

the recognized union would deny to

such workmen the fundamental

freedom guaranteed under Art.19(1)(a)

and 19(1)(c) of the Constitution."

xxxx xxx xxx

".Conferring the status of recognized

union on the union satisfying certain

pre-requisites which the other union is

not in a position to satisfy does not

deny the right to form association. In

fact the appellant union has been

recognized under the Trade Unions Act

and the members have formed their

association without let or hindrance by

anyone. Not only that the appellant

union can communicate with the

employer, it is not correct to say that

the disinclination of the workmen to

join the recognized union violates the

fundamental freedom to form

association. It is equally not correct to

say that recognition by an employer is

implicit in the fundamental freedom to

form an association. Forming an

association is entirely independent and

different from its recognition.

Recognition of a union confers rights,

duties and obligations. Non-

conferring of such rights, duties and

obligations on a union other than the

recognized union does not put it on an

inferior position nor the charge of

discrimination can be entertained. The

members of a non-recognised

association can fully enjoy their

fundamental freedom of speech and

expression as also to form the

association.

The Legislature has in fact taken

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note of the existing phenomen in trade

unions where there would be unions

claiming to represent workman in an

undertaking or industry other than

recognized union. Sec.22 of 1971 Act

confers some specific rights on such

non-recognised unions, on such being

the right to meet and discuss with the

employer the grievances of individual

workman. The Legislature has made a

clear distinction between individual

grievance of a workman and an

individual dispute affecting all or a

large number of workmen. In the case

of even an unrecognized union, it

enjoys the statutory right to meet and

discuss the grievance of individual

workman. It also enjoys the statutory

right to appear and participate in a

domestic or departmental enquiry in

which its member is involved. This is

statutory recognition of an

unrecognized union. The exclusion is

partial and the embargo on such

unrecognized union or individual

workman to represent workman is in

the large interest of industry, public

interest and national interest. Such a

provision could not be said to be

violative of fundamental freedom

guaranteed under Article 19(1)(a) or

19(1)(c) of the Constitution."

(emphasis supplied)

The judgment of the High Court disposing of the

writ petition and the order disposing of the review petition

filed on behalf of the management make the position

amply clear that the rights and privileges vested in a

non-recognized association are limited to espousing the

grievances of individual members relating to their service

conditions and representing them in domestic or

departmental enquiries held by the employer and not

proceeding before the conciliation officer, labour court,

industrial tribunal or arbitrator. The High Court has not

conceded any right to the non-recognized union to

participate in discussions relating to general issues

concerning all workmen.

In our considered view there is no serious illegality

or infirmity in the judgment and order passed by the

High Court. Therefore, no interference in the matter is

called for. Accordingly, the appeals are dismissed, but in

the circumstances of the case without any order as to

costs.

..J.

(D.P. MOHAPATRA)

..J.

(K.G. BALAKRISHNAN)

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May 6,2002