A

B

c

D

E

F

12

ROHTAS INDUSTRIES LTD. & ANR.

v.

ROHTAS INDUSTRIES STAFF UNION AND ORS.

December 18, 1975

[Y. V. CHANDRACHUD, V. R. KRISHNA IYER AND A. C. GUPTA, JJ.]

Constitution of India Article 226 and 226(/A)-Powers of Higf1 Court to

issue urrit against arbitrators under section lOA of Industrial Disputes Act­

Arbitration Act-Error apparent on the face of the record-Speaking award­

Error of Law. Industrial Disputes Act, 1947-Secs. 2(k) 10-A, 23, 24, 33C­

J.Vhether en1ployers can be awarded cornpensation for loss op profit due to illegal

strike under Industrial Disputes Act-Industrial Dispute-Enforce1nent of special

rights created ·by special statute whether confined to retnedies provided by tlze·

statute.

During the year 1948, the respondent, workmen working with both the appel­

lants v.'ent on illegal strike on account of Tradel Union rivalry. The workmen

\Vere not paid wages for the strike period and the appellants lost their profit ·

during the period. The employers and the workmen entered into an agreement

during the pendency of the conciliation proceedings and referred the claims of

\Vorkmen for salaries during the strike period and the claims of the employers

for compensation for loss

dlJe to the strike to the joint arbitration of two retired

Ifigh Court Judges and one retired MemQer of a Labour Appellate Tribunal under

section lO~A of the Industrial Disputes Act 1947.

The arbitrator delivered their avlard and held that the workmen participating

in the strike were not entitled to wages for the strike period. The arbitrators,

however, awarded huge compensation to the employers against the workmen for

the losses incurred by the employers during the strike period. The v,rorkmen

challenged the av.·ard as illegal and void by filing hvo writ petitions in the High

Court. The High Court upheld that part of the award which directed that the

workn1en participating in the strike were not entitled to

-wages. The High Court,

however, quashed the part of the

av.'ard which directed payment of compensation

by the V.'orkers to the management.

In appeal by Special Leave under Article 136, the appellants contended :-

1. The award under section 10-A of the Act savours of a private arbitration

and

is not amenable to correction under Article 226-of the Constitution.

2. The award

Of compensa_tion by the arbitrators suffers from no vice which

can be regarded as recognised grounds for the High Court interference.

HELD : ( 1) The expansive and extraordinary powers of the· High Court

under Article 226, as wide

as the amplitude of the language used,

indiCates

and so can affect "any person", even a private individual and be· available for

"any other purpose", even one for which another remedy may exist. The in~

sertion of Article 226(1A) reiterates that writ power can be exercised against any

person by

refere:Rce to the residence of such person.

It is one thing

G to affirm the jurisdiction and another to authorise free exercise. This

Court hns spelt out wise and clear restraints on the use of this

extraordinary remedy and High Courts will not go beyond those wholesome .f-·

H

inhibitions except where the monstrosity of the situation or other exceptional

circumstances cry for timely judicial interdict or mandate.

[17C-E]

2. An arbitrator exercising powers under section

lOA can bind even those

who are not parties to the reference or agreement and the whole exercise under

section IOA as well as the source of the force of the award on publication

derive. from the statute.

It is legitimate to regard such an arbitrator now as

part of the methodology of the sovereign's dispensation of justice, thus falling

within the rainbow of statutory tribunals amenable to judicial review.

The

award in the present case is not beyond the legal reach of Article 226. [18B-C]

•

ROHTAS INDUSTRIES V. STAFF UNION 13

3. The answer to the question whether the High Court should have· exercised

its powers under Article 226 in the present case will depend upon

wl;tether the

arbitrator has tied himslf down

to obviously unsound legal proposition in reach­

ing his verdict appearing from the face

of the award. The arbitrator may not

state the law such, even then such cute silence confers no greater or subtler

immunity on the award than plain speech.

The need for speaking order, where

considerable numbers are

affec.ted in their substantial rights, may well be a facet

of natural justice or fair procedure although in this case

w~ do not have to go so

far. The law sets no premium on juggling with drafting the award or hiding

the legal'. error. by blanking out. The inscrutable, face of the sphinx has no

better title

to invulnerability than a speaking face which is a candid index of the

mind. [190,

ZOF-Hl

4. According to the arbitrators, the strike was illegal being in violation of

section

24 of the Act. the illegal strike was animated by inter-union power

struggle

,and that it inflicted loss on the management by forced closure and that

the loss flowing from the strike was liable to be recompens~d by award of

damages. In this chain of reasoning the question

of la\v whether an illegal

strike causing

Joss of profit justifies award of damages is necessarily involved.

The arbitrator held in the affirmative and according

to us it is an unhappy error

of la\v. In the present case the arbitrators have made a sufficiently

spe!lking

award both on facts and on law. After coming to the conclusion that the strike

was illegal the)' held that compensation necessarily follows based on the rule

of English common law. The English cases laying down the rule of common

law ·were a response to the requirement of Industrial civilization of the 19th

Century England. Trade and industry on the

laissez faire doctrine flourished and

the law of torts,

was shaped to serve the economic intere_sts of the trading and

in­

dustrial community. Whatever the merits of the norms, violation of which

constituted 'conspiracy' in English Law, it

is a problem for creative Indian Juris­

prudence

to consider how far a mere combination of men working for furthering

certain objective can

be prohibited as a tort according to the Indian value system.

Our constitution guarantees the right to form associations, not for gregarious

pleasure, but to fight effectively for the redressal of grievances. Our constitution

is sensitive to \Vorkers rights. English history, political theory and life style be­

iag different from Indian conditions where the Father of the Nation organised

boycotts and mass satyagrahas

we cannot incorporate English conditions without

a_ny

adaptation into Indian Law. [21B-C, 22A, B-C, Dl

5. Even in England, till recently it could not be said with any certainty that

there was any such tort as conspiracy. The tort

is unusual because it

em­

phasizes the purpose of the defendants rather than the result of their conduct.

Even when, there are mixed motives liability will depend on ascertaining which

is the predominant object of the true motive or the real purpose of the defendant.

The motive

of an illegal strike may be to advance the workers' interest or

steal

a march over a rival union but never or rarely to destroy or damage the indus­

try. However, if some individuals destroy th~ plant and machinery wilfully to

cause loss

to the employer such individuals will be liable for the injury so caused.

Sabotage

is no

\Veapon in \·orkers' legal armoury. It is absolutely plain that the

tort of conspiracy necessarily involves advertence to the object of the combina~

tion being the infliction of damage on the plaintiff. The strike may be illegal

but if the object is to bring the employer to terms with the employees or to bully

the rival trade union into submission there cannot be an actionable combination

in tort.

In the present case, the arbitrators did not investigate_ the object of the

strike. The arbitrators assumed that

if

the strike is ille,gal the tort of consipracy

is made out. The counsel for the appellants fairly conceded that the object

of the strike was inter-union rivalry. There is thus a clear lapse in the law on

the part of the arbitrators manifest on the face of the award. [22F, 238-C, E,

H, & Z4A-BJ

6. It is common case that the demand for the wages during the strike period

constitutes an Industrial Dispute within section

_2(k) of the Act. It is

agreed by

both the sides that section

23 read with section 24 makes the strike in question . illegal. An illegal strike is the creation of the statute and the remedy for the

illegal strike and its fall out has to be sought, within the statute and not de hors

A

B

c

D

E

G

H

14 SUPREME COURT REPORTS [1976] 3 S.C.R.

A it. No other relief outside the Act can be claimed -0n-g~neral principles of

jurisprudence. The case of Prenu'er A11ton1obiles fo11owed. [25 B--C]

B

7. The enforcement of a right or obligation under the Act must be by

a re1nedy provided in the Statute. The right of the management to claim com­

pensation is not provided by the Act, and, therefore, the arbitrators Committed

an tx facie leral error. The consent of the parties cannot create arbitral juris­

diction under the Industrial Dispute~ Act. The claim for compensation cannot

be a lawful subject for arbitration because

it is not covered within the definition

of lndustrial Disputes in section

2(k). We are unable to imagine a tort of

liability or compensation based on loss of business being regarded as an indus-

trial dispute as defined in

thel Act. Section 33 C provides for speedy recovery

of money due to a workman from an employer under a settlement

or award.

It does not provide for recovery of money by the employer from the workman.

Obviously because the workman belongs to the

weaker section. Claims by em­

ployers against the \vorkmen on grounds of tortious liability have not found

a place in the pharmocopoeia of Indian Industrial L1w. [26 Dt 27A, C, D-E]

c CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 1727-1728 of

1969.

r

Appeals

by Special Leave from the Judgment and Order dated the ~

2nd May. 1962 of the Patna High Court of Judicature at Patna. in

D

E

M.J.C. Nos. 475 and 498 of

-1959.

A. B. N. Sinha, B. P. Maheshwari and Suresh Sethi for the Appel­

lants (in both the appeals).

B. C. Chose, S.S. Jauhar, D. N. Pandey, A. Sinha and D. P. Mukher­

jee for Respondent 1 (In C.A. 1727) and Respondents 1-3 (In CA

1728). -

D. P. Singh, S. C. Agarwal and V. J. Francis for respondents 7 and

8

(In CA 1727 and Respondent 4 in (1728/69).

The Judgment of the Court was delivered

"by

KRISHNA IYER, J.-We permit ourselves a few preliminary observa-

tions disturbingly induced byi th<:> not altogether untypical circumstances

of these two appeals, before proceeding to state the facts, set out the

submissions and decide the points.

F Industrial law

in India has not fully lived up to the current challenges

of industrial life, both in the substantive norms or regulations binding

the three

parties-the States, Management and Labour-and in the

pro­

cessual system which has baulked, by dawdling dysfunction, early fina­

lity and prompt remedy in a sensitive area where quick solution is of

thtj very essence of real justice. The legislative and judicial processes

have promises to keep if positive industrial peace, in tune with distribu-

G tive economic justice and continuity of active production, were to

be

accomplished. The architects of these processes will, we hopefully

ex­

pect, fabricate creative changes in the system, normative and adjectival.

H

The two appeals before us, passported by special leave under Art. .

136, relate to an industrial dispute with its roots in 1948, meandering

along truce, union rivalry and the like, into strikes and settlements, the

last of which led to an arbitration award in 1959 which, in tum, promp­

ted two writ petitions before the High Court. After a spell of a few

years they ripened into a judgment. Appeals to this Court followed

and, after long gestation of

six years for preparation of

papers and a

•

'

'

•

ROHTAS INDUSTRIES v. STAFF UNION (Krishna Iyer, !.) 15

like period the cases are ready for final hearing or parturition, in all 12 A

years after the grant of leave. By this cumulative lapse of time the

generation of workers who struck work two decades ago have themselves

.all but retired, the representative Union itself which sponsored the dis-

pute has, the other side faintly states, ceased

to command representative

character, the Managements themselves have, out of many motives, dis­

claimed the intention to recover the huge sums awarded to them by the

arbitrators and the only survival after death, as it were, is a die-hard

B

litigation tied up to a few near-academic, but important, legal points for

adjudication by the highest Bench!

On this elegiac note we will enter

the relevant area of facts and law since

we must decide cases brought

before

us, however stale the lis.

At this stage we may mention our strong feeling that where the

superior courts, after hearing full arguments, are clearly inclined to

affirm the judgment under appeal for substantially similar reasons as

have weighed with the lower Court, there

is no need to give lengthy rea­

sons

for dismissing the appeal. Brevity, except in special cases, may

well

fill the bill where the fate is dismissal.

On this score we are dis­

posed to make short shrift of the appeals with stating but the necessary

facts al1d focusing on the larger legal facets. Nevertheless, the signifi­

cance and plurality

of the points pressed have defeated condensation.

The facts

Two connected managements of industries in the same

locality, who

figure as appellants before us, had a running industrial dispute with their

workers. which has had a long history moving in a zigzag course and

c

D

sick.Jied over by alleged internecine trade-union strife. There were two E

trade unions which were perhaps of competitive strength and enjoying

·recognition. One of them, the Rohtas Industries Mazdoor Sangh (for

short, the Mazdoor 'Sangh) was the representative union during the

relevant period while the other, the Rohtas Industries Seva Sangh (for

brevity, the Seva Sangh) is not a party before this Court and so we are

not concerned with it except for the purpose of noticing its presence in

the settlement of the dispnte which starts the story

so far as the litigation F

is concerned. There

w~ a strike in the Industry (for our purposes this

expression embraces both the appellants) which came to an end by vir-

·tue of a memorandum of agreement dated October 2, 1957, to which

not merely the management but also the

two registered unions afore­

mentioned and the two un-registered unions which had a lesser follow-

ing, were party. The terms of the said agreement provided inter alia ~U: G

"The employees' claim for wages and salaries for the

period of strike and the company's claim for compensation for

losses due to strike shall be submitted for arbitration of Sri J.

N. Majumdar and Sri R. C. Mitter, ex-High Court Judges and

Ex-Members· of the Labour Appellate Tribunal of India as

joint arbitrators and their decisions on the two questions shall H

be final and binding on all the parties."

(Clause 7 of agreement) "

16 SUPREME COURT REPORTS [J 976] 3 S.C.R.

A This agreement was admittedly arrived at during conciliation proceed­

ings contemplated

by the Industrial Disputes Act, 1947 (for short, the

Act) and the reference to arbitration

·spelt out in clause 7 directly and:.

admittedly fell under s. lOA of the Act.

It is apparent that the arbitrators were seised of two questions : (a)

the claim of the workers for wages for the period of strike; and (b)

B the claim of the management for compensation for its losses fiowing­

from the strike. The Bo;i_rd of arbitrators, two retired Judges of the

Calcutta High

Court-held extensive hearings spread over a .year and

a half, made a lengthy award marshalling the evidence, adducing the

reasons, discussing

the. law and recording its decision on the two vital

issues. At the end of the detailed and reasoned record of

conclusions,

the award runs thus :

c

D

E

"Our award accordingly is:-

(1) That the workmen participating in the strike are not

entitled to

wages and salaries for the period of the strike.

(2) That the company do recover from the workmen

participating in the strike, compensation assessed at

lh. 80,000

(rupees eighty thousand).

(3) That the workmen jointly and severally do pay tv the

company one eighth of the total costs of the arbitration. In'

default of payment the company will be at liberty to recover

the same in such manner

as it thinks fit. Subject to this the

parties

do bear their respective costs.''

The workmen were deprived of their

wages during the period of

the

strike on the score that it was an illegal strike. Both sides seem to have

accepted this finding after an unsuccessful challenge in the High Court

and happily industrial peace

is said to be prevailing currently. What did.

hurt the Mazdoor

Sangh more and what the management did try to have

and to hold

as a bonanza was the second finding that the strikers, apart

F from forfeiting wages, do pay compensation in the huge sum of

Rs.

6,90,000/-in one case and Rs. 80,000/-in the other, for the loss

of profits suffered

by the manufacturing business of the management, a

pronouncement unusual even according

to counsel for the appellant, al­

though sustainable in law, according to him. For the workers this unique

direction of industrial law

is fraught with ominous consternation and

dangerous detriment. The Mazdoor

Sangh challenged the award a•

G illegal and void by filing two writ petition! but the High Court quashed

that part of the award which directed payment of compensation by the

workers to the management and,

as

earlie_v pointed out, both sides have

chosen to abide

by the award in relation to the denial of wages during

the strike period.

The Main

Points Urged

H The short but important issue, which has projected some seriouS'

questions of law, is as to whether the impugned part of the award has·

been rightly voided by the High Court. We may as well formulate

/

•

'

. -I

•

'ROHTAS INDUSTRIES v. STAFF UNION (Krishna Iyer, !.) 17

them but highlight the only major submission that merits close examina-A

tion, dealing with the rest with terse sufficiency. In logical order, coun-

sel for the appellant urged that ( 1)

(a) an award under s. 1

OA of the

Act savours of a private arbitration and is not amenable to correction

under Art. 226 of the Constitution.

(b) Even if

there be jurisdiction,

a discretionary desistence from its exercise is wise, proper and in con­

sonance with the canons

of restraint this Court has set down. (2) The

award of compensation by the arbitrators. suffers from no vice which can

IJ;,

be regarded as a recognisec ground for the High Court's interference.

(3) The view of law taken by the High Court on (i) the supposed flaw

in the award based on 'mixed motives' for the offending strike; (ii) the

exclusion of remedies other than under

s. 26 of the Act; and (iii) the

implied immunity from all legal proceedings against strikers allegedly

arising from

s. 18 of the Trade Unions Act, 1926 is wrong. A few other

incidental arguments have cropped up but the core contentions are what

c·

we have itemised above.

(1) (a) & (b)

'

The expansive and extraordinary power of the High Courts under

Art. 226

as wide as the amplitude of the language used indicates and

so can affect

any person--even a private individual-and be available

D•

for any (other) purpose-even one for which another remedy may exist.

The amendment to Art. 226 in 1963 inserting Art.

226(1A) reiterates

the targets of the writ power as inclusive of any person by the expres-

sive reference to 'the

residence of such person'. But it is one thing to

affirm

the jurisdiction, another to authorise its free exercise like a bull

in a china shop. This Court has spelt out wise and clear restraints on

the use of this extra-ordinary remedy and High Courts will not go beyond E.

those wholesome inhibitions except where the monstrosity of the situa-

tion or other exceptional circumstances cry for timely judicial interdict

or mandate. The mentor of law is justice and a potent drug should

be

judiciously administered., Speaking in critical retrospect and portentous

prospect, the writ power has, by ·and large, been the people's sentinel

on the

qui vive and to cnt back on or liquidate that power may cast a:

peril to human rights. We hold that the award here is not beyond the

F ·

legal reach of Art. 226, although this power must be kept in severer~

judicious leash.

Many rulings of the High Courts, pro and con, were cited before

us to show that an award under

s. 1

OA of the Act is insulated from

interference under Art. 226 but

we respectfully agree with

tlie observa-

tions of Gajendragadkar J., (as he then was) in

Engineering Mazdoor

G·

Sabha v. Hind Cycles Ltd(!

1

) which nail the argument against the exis-

tence of jurisdiction. The learned Judge clarified at p. 640 :

"Article 226 under which a writ of certiorari can be issued

in an appropriate case, is, in a sense, wider than Art. 136,

because the power conferred

on the High Courts to issue cer­

tain writs

is not conditioned or limited by the requirement that

the said writs can be issued

only against the orders of Courts n·

or Tribunals. Under Art. 226(1 ), an appropriate writ can

(1)"[19631 Supp: I S.C.R. 625.

18

.A

SUPREME COURT REPORTS [1976] 3 S.C.R.

be issued to any person or authority, including in appropriate

cases any Government, within the territories prescribed.

Therefore even

if the arbitrator appointed under section

lOA

is not a Tribunal under Art. 136 in a proper cases, a writ may

lie against

his award under Art.

226".

(p. 640)

B We agree that the position of an arbitrator under s. IOA of the Act

(as it then stood) vis a vis Art. 227 might have been different. Today,

however, such an arbitrator has power to bind even those who are not

parties to the reference or agreement and, the whole exercise under s.

lOA as well as the sonrce of the force of the award on publication derive

from the statute.

It

i~ legitimate to regard such an arbitrator now as

part of the methodology of the sove~eign's dispensation of justice, thus

.C falling within the rainbow of statutory tribunals amenable to judicial re­

view. , This observation made en passant by us is induced by the dis­

cussion at the bar and turns on the amendments to

s.

IOA and cognate

provisions like

s. 23, by Act XXXVI of 1964.

D

lE

]1

Should the Court invoke this high prerogative under Art. ~26 in the

present case

? That depends. W c will examine the grounds on

which

the High Court bas, in the present case, excised a portion of the award

as illegal, keeping in mind the settled rules governing judicial review

of private arbitrator's awards. Suffice it to say, an award under s. IOA

is not only not invulnerable but more sensitively susceptible lo the writ

lancet being a quasi-statutory body's decision. Admittedly, such

an,

award can be upset if an apparent error of law stains its face. The

distinction, in this area, between a private award and one under

s. 1

OA

is fine, but real. However it makes slight practical difference in the

present case; in other cases it may. The further grounds for iuvalidat­

ing

an award need not be considered as enough unto the day is the

evil thereof.

(2)

Tims, we arrive at a consideration of the appellants second sub­

mission, perhaps the most significant in the case, that the High Court

had

no legitimate justification to jettison the compensation portion of

the award. Even here,

we may state that counsel for the appellants,

right at the outset, mollified possible judicial apprehensions springing

from striking workers being held liable for Joss of management's profits

during the strike period by the assurance that

his clients were inclined

to abandon realisation of the entire compensation, even

if this Court

up­

held that part of the award in reversal of the judgment of the High Court

-a generous realism. He fought a battle for principle, not pecunia. We

record this welcome fact and proceed on that footing.

The relevant law which

is beyond

controvers)" now bas been clearly

stated in Halsbury's Laws of England thus : .

"Error of law on the face of award : An arbitrator's

.award may be set aside for error of

Jaw appearing on the face

of it, though the jurisdiction

is not lightly to be exercised. . .

The jurisdiction

is one that exists at common law

indepen­

dently of statute. Jn order to be a ground for setting aside the

award, an error in law on the face of the award must

be such

that there can be found in the award, or in a document actually

/

r

•

ROHTAS INDUSTRIES v. STAFF UNION (Krishna Iyer, /.)

incorporated with it, some legal proposition which is the basis

of the award and which

is erroneous .

. . . . where the question referred for arbitration

is a ques­

tion of

construction, which is, generally speaking, a question

of law, the arbitrator's decision cannot be set aside only be­

cause the court would itself have come to a different conclu-

19

sion; but if it appears on the face of the award that the arbitra-

B·

tor bas proceeded illegally, as for instance, by deciding on evi-

dence which

was not admissible, or on principles of construc-

tion

which the law does not countenance, there is error in law

which may be ground for setting aside the award.

(para 623, p. 334, Vol. 2, Fourth

Edn)

We adopt this as sound statement of the law. Not that English law

binds

us but that the jurisprudence of judicial review in this branch is

C:

substantially common for Indian and Anglo-American systems and so

Halsbury

has considerable persuasive value. The wider emergence of

common canons of judicial review

is a welcome trend towards a one­

world public law. Indeed, this

Court has relied on the leading English

decisions

in several cases. We may content ourselves with adverting to

Bungo

Steel Furniture(

1

)

and to the unreported decision Babu Ram(').

In simple terms, the Court has to ask itself whether the arbitra-

Do

tor has not tied himself down to an obviously unsound legal proposi-

tion

in reaching his verdict as appears from the face of the award. Bhargava J., speaking for the majority, in Bungo Steel(') stated the

law: I•

"It is now a well-settled principle that if an arbitrator, 'in

deciding a dispute before him, does not record his reasons and

does not indicate the principles of law on which he has pro­

ceeded, the award

is not on that account vitiated. It is only

when the arbitrator proceeds to give his reasons or to lay

down principles on which he has arrived at his decisions that

the Court

is competent to examine whether he bas proceeded

contrary to law and

is entitled to interfere if such error in law

is apparent on the face of the award

itself."

(p. 640--641)

In Bharat Barrel & Drum Manufacturing Co. (

3

) dealing with a private

award and the conditions necessary for exercise of writ jurisdiction to

correct

an error of law apparent on the record, did not lay down the law

differently from what

we have delineated.

In one of

thn leading English cases Champsey Bhara & Co. (

4

)

fol­

lowed in India, Lord Dunedin defined 'error of law on the face of the

award' as 'where the question of law necessarily arises on the face of

the award or upon some paper accompanying and forming part of the

award' and said that then only the error of law therein would warrant

iudicial correction. The Law Lord expressed himself luscently when

lie stated :

F'

G

"An error in law on tl1e face of the award means, in their ff

Lordships' view, that yon can find in the award ... some legal

-~- ~-~--

(l) [1967]1S.C.R.633. (2) C.A. 107of1966 decided on 5-12-68.

(3) A.LR. 1967 S.C. 361. (4) 50 I.A. 324.

·C

E

20 SUPREME COURT REPORTS . [1976) 3 S.C.R;

proposition which is the basis of the award and which you can· -.

_then say is erroneous."

Williams J., in th'e case of Hodkinson v. Verne(

1

) hit the nail on the

head by using the telling test as linnly

~stablished, viz., 'where the

question of law necessarily arises

on

th~ face of the award'. In this

view the enquiry by the Court before venturing

to interfere is to ascer­

tain whether

an erroneous legal proposition is the basis of the award.

Nay, still

Jess. Does a

question of law (not even a proposition of law).

necessarily arise on the award followed by a tlawsome finding explicit

or visibly implicit ? Then. the Court can correct.

Tucker

J., in James

Clark (2) formulates the Jaw to mean that if the

award were founded

on a finding which admits of ouly one proposition

of law as its foundation

J!nd that law is erroneous on its face, the Court

has the power and, therefore, the duty

to set right. While the Judge

cannot explore, by chasing, subterranean routes

or ferret

out by delving

deep what lies buried in the unspoken cerebration of the arbitrator

and

interfere with the award on the discovery of an error of law by such

adventure,

it is within his purview to look closely at the face of the award

to, discern the law on which the arbitrator has acted if it is transparent,

even transluscent

but lingering between the lines or merely wearing a

verbal veil.

If by such an intelligent inspection of the mien of the

award-which is an index of the mind of the author-an error of law

forming the

basis of the verdict is directly disclosed, the decision is lia­

ble to judicial demolition. In lames Clark (

2

), the issue was posed with

considerable clarity and nicety.

If, at its face value, the .award appears

to be based on an erroneous finding of law alone, it must fail. The

clincher

is that the factual conclusion involving a legal question must

necessarily be wrong in point of law. Even though the award contains '

no statement of the legal proposition; if the facts found raise 'a clear

point

of law which

is' erroneous on the face of it', the Court may rightly

hold that an error of law

on the face of the award exists and invalidates.

Let us put the proposition more expressively and explicitly. What is

important is a question of law arising

on the face of the facts found and

its resolution ex facie of sub silentio. The arbitrator may not state the

law as such. Even then such cute silence confers no greater

or subtle(

immunity

on the award than plain speech. The need for a speaking

order, where considerable numbers arc affected in their substantial

rights, may well

be a facet of natural justice or fair procedure, although;

. in this case, we do·not have to go so far. If, as here, you find an errone­

ous law as the necessary buckle between the facts found and the con­

clusions recorded, the award bears its condemnation on its bosom. Not

a reference in a narrative but a clear legal nexus between the facts and

the finding. The

Jaw sets no premium on juggling with drafting the

award

or hiding the legal error by blanking out. The inscrutable face

of the sphinx has no better title

to invulnerability than a

speak iog; face

which is a candid index of the mind. We may, by way asicle. express

hopefully the view that al minimal judicialisation by statemt/ . laconic

or lengthy, of the essential law that guides the decision, is not only rea­

sonable and desirable but has, over the ages, been observed by arbitra-

. tors and quasi-judicial tribunals as a norm of processual justice .. We

11) [1857] 3 C.B. (N.S.) 189, (2) [1944] ! K.B. 566.

,

l

'

...

)

ROHTAS INDUSTRIES v. STAFF UNION (Krishna Iyer, J.) 21

-do not dilate on this part of the argument as we are satisfied that be the A

test the deeply embedded rules to issue certiorari or the traditional

_grounds to set aside an arbitration award 'thin partition do their bounds

-divide' on the facts and circumstances of the present case.

The decisive question

now comes to thei fore. Did the arbitrators

.commit an error of law on the face of the award in the expanded sense

we have explained

? The basic facts found by the arbitrators are beyond B

dispute and admit of a brief statement. We summarise the fact situation

:succinctly and fairly when we state that according to the arbitrators, the

strike in question

was in violation of s. 24 of the Act

and therefore ille-

_gal. This illegal strike animated by inter-union power struggle, inflicted

losses on the management by forced closure. The loss

flowing from the

.strike

was liable to be recompensed by award of damages. In this chain

.of reasouing is necessarily involved the question of law as to whether C

.an illegal strike causing loss of profit

is

a de!ict justifying award of dam-

.

.ages. The arbitrarors held, yes. We hold this to be an unhappy error

of law-loudly obtrusive on the face of the award. We may as well set

out, for the sake of assurance, the simple steps

in the logic of the arbi­

trators best expressed in their own words which we excerpt : ·

"(a) It is argued that strike is a legitimate weapon in the

hands of workmen for redressal of their grievances and

if they

are made liable for loss on account of strike then the basic idea

of strike

as a means for having the grievances redressed will

be taken away. The fallacy in this argument is that it presup­

poses the strike not to be illegal and unjustified. In the pre­

sent case

we found the

strikei to be otherwise. The workmen

have got no right of getting their grievances redressed by re·

:Sorting to illegal means which is an offence. ·

(b) It has been argued that the claim for compensation is

not an industrial dispute as defined in the Industrial Disputes

Act. Considering the issue of compensation in a water-tight

·compartment the argument might appear to be attractive. But,

in our opinion, in this case the claim for compensation by the

'company is a consequence

flowing from an admitted industrial

dispute,

which in this case is whether the strike was illegal

and/or unjustified and as against the condition of service as

laid down in the certified

·stanaing order en which point our

'fi_nding has been against the workmen ... "

•

The award of the Tribunal, in its totality, is quite prolix, the

reasons stated in arguing out its conclusions many and thus it is just to

' stat·c that in the present case the arbitrators-two retired Judges of the

Cnlrntta High Court-have made a sufficiently speaking award both

on focts and on law. They have referred to the strike being illegal

with specific reference to the provisions of the Act, but faulted them­

selves in law by upholding a case for compensation as axiomatic,

necessarlly based on a rule of common law i.e., English common law.

The rule of common law thns necessarily arising on the face of the

:awara is a dear question of law.

D

E

F

G

H

A

B

c

D

E

F

G

H

22

SUPREME COURT ~EPORTS [1976) 3 S.C.R.

What is this rule of common law? Counsel for the appellanis.

inevitably relied on the tort of 'conspiracy' and referred

us to Moghul

Steamship Co.(

1

); Allen v.

Floor("); Quinn v. Leathem(

3

) and

Sorrel v. Smith ('). These decisions of the English Courts are a

response to the societal requirements of the industrial civilisation of

the 19th Century England. Trade and Industry on the laissez faire

doctrine flourished and the law of torts was shaped to serve the eco­

nomic interests of the trading and industrial community. Political •

philosophy and economic necessity of the dominant class animate

legal theory. Naturally, the British law in this area protected business

from the operations of a combination of men, including workers,

in

certain circumstances. Whatever the merits of the norms, violation

of which constituted 'conspiracy' in English law, it

is a problem

for creative Indian jurisprudence to consider, detached from anglo­

phonic inclination, how far a mere combination of men working for

furthering certain objectives can

be prohibited as a tort, according

to the Indian value system.

Our Constitution guarantees the right

to form associations, not for gregarious pleasure, but to

fight effect­

ively for the redressal of grievances.

Our Constitution is sensitive

to workers' rights. Our story of freedom and social emancipation led

by the Father of the Nation has employed, from the highest of motives,

combined action to resist

evil and to right wrong even if it meant loss

of business profits for the liquor vendor, the brothel-keeper and the

foreign-cloth dealer. Without expatiating on these seminal factors,

we may observe that English history, political theory and life-style

being different from Indian conditions replete

with organised boycotts

and mass satyagrahas,

we cannot incorporate English torts without any

adaptation into Indian

law. A tort transplant into a social organism

is as complex and careful an operation as a heart-transplant into an

individual organism, law being life's instrumentality and rejection of

exotics being a natural tendency. Here,

judges are sociological sur­

geons.

Let

us examine 'conspiracy' in the English Law of Torts to see

if even there it

is possible to hold that an illegal strike per se spells

the wrong.

We may state that till recently it could not be said with

any certainty that there

was any such tort as 'conspiracy'.

Salmond

thought that there was not (See Salmond-Law of Torts-p. 505, 15

Ed.). It is interesting that that in Edition of Salmond, Mogul is

linked up by the learned author with a capitalist economy. Be that

as it may, the common law of England today is more or less clear,

some rumblings notwithstanding.

"A combination wilfully to do an act causing damage to a

man in his trade or other interests is unlawful and if damage

in fact

is caused is actionable as a conspiracy. To this

there

is an exception where the defendants' real and predo­

minant purpose

is to advance their own

lawful interests in a

matter in which they honestly believe that those interests

would directly suffer if the action against the plaintiff

was not taken. In truth, the Crofter case has made section 1

(!) [1892] A.C. 25. (2) [18981 A.C. J.

(3) [1901] A.C. 495. (4) [1925] A.C. 700.

!

•

y

I

l

t

'

ROHTAS INDUSTRIES v·. STAFF UNION (Krishna Iyer, J.) 23

of the Trade Disputes Act, 1906, largely unnecessary, for

there will now be few conspiracies arising out of trade dis­

putes wltich are not protected at conunon law."'

(pp. 508-509, 15th Edn., Sweet & Maxwell)

(emphasis, ours)

The essence of actionable conspiracy is best

brought out by Salmond :

"The tort is unusual because it emphasises the purpose

of the defendants rather than the results of their conduct."

(p.513, 15th Edn., Sweet & Maxwell)

(emphasis, ours)

Even when there are mixed motives, 'liability will depend on as­

certaining which

is the predominant object or the true motive or the

real purpose of the defendant. Mere combination or action, even

if it be

by illegal strike, may be far away from a 'conspiracy' in. the

sense of the law because in all such cases, except in conceivably

exceptional instances, the object or motive

is to advance the workers'

interests or to steal a march over a rival union but never or rarely to

·

destroy or damage the industry. It is difficult to fancy workers who

live by working in the industry combining to kill the goose that lays

the golden

eggs. The inevitable by-product of combination for cessa­

sion of work may be loss to the

rr.anagement but the obvious intend­

ment of such a collective bargaining strategy is to force the employer

to accept the demand of the workers for betterment of their lot or

redressal of injustice, not to inflict dama~e on the boss. In short, it

is far too recondite for an employer to urge that a strike, albeit illegal,

was motivated by destruction of the industry. A scorched earth

policy may, in critical times of a war, be reluctantly adopted

by a

people, but such an imputed motive

is

largely imaginary in strike

situations. Ho\vever, we are clear in our minds that if some indivi­

duals destroy the plant or damage the machinery wilfully to cause Joss

to the employer, such individuals will be liable for the in jury so caus­

ed. Sabotage

is no weapon in workers' legal armoury ..

The leading case of Sorrel v.

Smith (supra) emphasizes that a

combination of two or more persons for the purpose of injuring a

man in his trade

is unlawful and, if it results in damage to him, is

actionable. The real purpose of the combination is the crucial test

between innocence and injury.

It may well be that even where there

is an offending object, it may be difficult for a court to hold that there

is a tort if one may read into the facts an equal anxiety for the defen­

dants to promote their success which produces the plaintiff's extinc­

tion. There

is a penumbra] region, as Lord Sumner pointed out in

Sorrel

(Supra) : ·

"How any definite line is to be drawn between acts,

whose real purpose

is to advance the defendant's interesls,

and acts, whose real purpose

is to injure the plaintiff in his

trade,

is a thing

which I feel at present beyond my power."

It is absolutely plain that the tort of conspiracy necessarily involves

advertance to and affirmation of the object of the combination being

the .infliction of damage or distraction on the plaintiff. The strike

3-'-"L390oSCl/76

•

A

B

c

D

E

F

G

H

A

B

c

24 SUPREME COURT REPORTS [1976) 3 S.C.R.

may be illegal but if the object is to bring the employer to terms with

the employees or to bully the rival trade union into submission, there

cannot

be an actionable combination in tort. In the present case, it

is unfortunate that the arbitrators simply did not investigate or pass

upon the object of the strike.

If the strike is illegal, the tort of

conspiracy

is made out, appears to be the proposition of law writ

terse­

ly into the award. On the other hand, it is freely conceded hy counsel

for the appellant that the object

was inter-union rivalry. There is

thus a clear lapse in the law on the part of the arbitrators manifest

on the face of the award.

We have earlier referred to the need for a fresh look at conspiracy

as a tort when we bodily borrow the elements of English law and

apply them to Indian

law. It is as well that we notice that even in

England considerable criticism

is mounting on the confnsed state of

the law of conspiracy. J.T. Cameron has argued (in 1965 Vol. 28

Modern Law Review p. 448) that :

"experience has already shown that conspiracy is a hydra

perfectly capable of growing

two heads to replace an

ampu­

tated one, and the authorities contain material which collld

be used to impose liability in very wide and varied circum-

stances.

It is time, therefore, to consider what form legis-

lation

should take, and to urge that the proper answer is to

remove the tort of conspiracy from the

Jaw altogether, and

with it the Rookes

v. Barnard version of intimidation,

and

to put in its place a different basis of liability.

;.

'

1• (CONSPIRACY AND INTIMIDATION : An Anti-Meta-

IF

H

physical Approach)

The author complains that the fundamental basis

is unsatisfactory and

f ·

uncertain and demands that a complete re-writing of the principles

on which the tort of conspiracy and intimidation

is necessary.

We may as well suggest that, to silence possible mischief flowing

from the confused state of the law and remembering how dangerous

it would be if long, protracted, but technically illegal strikes were to

be followed by claims by managements for compensation for loss of

profits, a legislative reform and re-statement of the

Jaw were

under­

taken at a time when the State is anxious for industrial harmony

consistent with workers' welfare. This rather longish discussion has

become necessary because the problem

is serious and sensitive and

the law

is somewhat slippery even

ii} England .. We are convinced

that the award

is bad because the error of Jaw is patent.

The

High Court has touched upon another fatal frailty in the

ten­

ability of the award of compensation for the Joss of profits flowing

from the illegal strike. We express our concurrence with the High

Court that the sole and whole foundation of the award of compensa­

tion by the arbitrators, ignoring the casual reference to an ulterior

motive of inter-union rivalry,

is squarely the illegality of the str;ke,

The workers went on strike claiming payment of bonus

as crystalized

•

•

ROHTAS INDUSTRIES v. STAFF UNION (Krishna Iyer, !.) 25

by the earlier settlement (d/2-10-1957). There thus arose an indus-A

trial dispute within

s. 2(k) of the Act.

Since conciliation proceedings

were pending the strike

was ipso jure illegal ( ss. 23 and 24). The

consequence, near or remote, of this combined cessation of work

caused loss

to the management. Therefore the strikers were liable in

damage to make good the loss. Such is the logic of the award.

It is common case that the demands covered by the strike and B

the

wages during the period of the. strike constitute an industrial dis-

pute within the sense of

s: 2(k), of the Act.

Section 23, read with

s. 24, it is agreed by both sides, make the strike in question il!ega•I. An

'illegal strike'

is a creation of the Act. As we have pointed out

earlier, the compensation claimed and awarded

is a direct reparation

for the loss of profits of the employer caused

by the illegal strike. If

so; it is contended by the respondents, the remedy for the illegal strike c

and its fall-out has to be sought within the statute and not de hors it.

If this stand of the workers is right, the remedy indicated in s. 26 of

the Act,

viz., prosecution for starting and continuing an illegal strike.

is the designated statutory remedy. No other relief outside the Act

can be claimed on general principles of jurisprudence. The result

is

that the relief of compensation by proceedings in arbitration is con-

trary to

Jaw and bad. ' D

The

Premier Automobiles Case(

1

)

settles the legal issue

invoh·ed

in the above argument. The industrial Disputes Act is a comprehen­

sive and self-contained Code

so far as it speaks and the enforcement of

rights created thereby can only be through the procedure laid down

therein. Neither the civil court nor

any other Tribunal or body can

award relief.

Untwalia J., speaking for an unanimous court, has,

in

Premier Automobiles

(Supra) observed : E

"The object of the Act, as its preamble indicates, is to make

provision for the investigation and settlement of indust-

rial disputes, which means adjudication of such disputes also.

The Act envisages collective bargaining, contracts between

Union representing the workmen and the management, a

matter which

is outside the

realm of the common Jaw or the

Indian

Jaw of

Contract."

After sketching the scheme of the Act, the learned Judge stated the

law thus.

F

" ... the Civil Court will have no jurisdication to try and

adjudicate upon an industrial dispute if it concerned enforce­

ment

of certain right or liability created only under the

Act." G

* *

"In Dea v. Bridges (1831 lB and Ad, 847 (2)-(1898)

A.C.

387 at p. 859 are the famous and of quoted words of

Lord Tenterden,

C.J., saying :

"where an Act creates an obligation and enforces the

performance in a specified manner,

we take it to be a general

rule that performance cannot be enforced in any

other."

(1) [1976] 1 S.C.R. 427.

H

A

B

c

D

E

F

G

H

26

SUPREME COURT REPORTS [1976] 3 S.C.R.

Barraclough v. Brown & Ors(

1

), decided by the House of Lords is;

telling, particularly Lord Watson's statement of the law at p. 622 :

"The right and the remedy are given w10 flatu and one

cannot be dissociated frem the other."

In short, the enforcement of a right or obligation under the Act, must

be

by a remedy provided uno

flatu in the statute. To sum up, in the

language of the

Premier Automobiles Ltd.

(Supra) :

"If the industrial dispute relates to the enforcement of

a right or an obligation created under the Act, then the only

remedy available to the suitor

is to get an adjudication

under the

Act."

Since the Act which creates rights and remedies has to be con­

sidered

as one

ho~ogenous whole, it has to be regarded ww flatu, in

one breath, as it were. On this doctrinal basis, the remedy for the

illegal strike (a concept which is the creature not of the common law

but of

s. 24 of the Act) has to be sought exclusively in s. 26 of the

Act. The claim for compensation and the award thereof in arbitral

proceedings

is invalid on its

face-'on its face' we say because this

jurisdictional point has been considered by the arbitrators and decid­

ed by committing an

ex-facie legal error.

It was argued, and with force in our view, that the question of

compensation by workers to the management

was wholly extraneous

to the Act and therefore, outside the jurisdiction

of

a voluntary refer­

ence of industrial dispute under s.I OA. While we arc not called

upon to pronounce conclusively

on the contention, since we have ex­

pressed our concurrence with the High Court on other grounds,

we

rest content with briefly sketching the reasoning and its apparent

tenability. The scheme of the Act, if

we may silhouette it, is to

codify the law bearing on

industrial dispute. The jurisdictional

essence of proceedings under the Act

is the presence of an 'industrial

dispute'. Strikes and lock-outs stem from such disputes.

The

machinery for settlement of such disputes at various stages is prn­

vided for by the act. The statutory imprimatur is given to settle­

ment and awards, and norms of discipline during the pendency of

proceedings are set down in the Act. The proscriptions stipulated,

as for example the prohibition

of a strike, are followed by penalties,

if breached.

Summary procedures for adjudication as to whether

conditions of service etc., of employees have been changed during the

pendency of proceedings, special provision for recovery of money

due to workers from employers and other related regulations; arc

also written into the Act. Against this backdrop, we have to see

whether a claim by an employer from his workmen of compensation

consequent on any conduct of theirs. comes within the purview of

the Act. Suffice it to say that a reference to arbitration under s. 1 llA

is restricted to existing or apprehended industrial disputes. Be it

noted that

we are not concerned with a private arbitration. but

a

statutory one governed by the Industrial Disputes Act, deriving its

validity, enforceability and protective mantle during the pendency of

the proceedings, from s. lOA. No industrial dispute, no valid arhitral

---~---···-- -

(1) [1897] A.C. 615.

i

•

r

l

ROHTAS INDUSTRIES v. STAFF UNION (Krishna Iyer, J.) 2 7

reference. Once we grasp this truth, the rest of the logic is simple. A

What is the industrial dispute in the present case? Everything that

overflows such disputes spills into areas where the arbitrator deriving

authority under

s. l

OA has no jurisdiction. The consent of the parties

cannot create arbitral jurisdiction under the Act. In this perspective,

the claim for compensation can be a lawful subject for arbitration

only if it can

be accommodated by the definition of 'industrial dispute'

in

s.2(k).

Undoubtedly this expression must receive a \vide con-B

notation, calculated as it is to produce industrial peace. Indeed, the

legislation substitutes for free bargaining between the parties a binding

award; but what disputes or differences fall within the scope of tho

Act? This matter fell for the consideration of the Federal Court in

Western India Automobile Association(!). Witl1out launching on a

long discussion,

we may state that compensation for loss of business

is not a dispute or difference between employers and

workmen C

'which is' connected with the en1ploy111ent or non-en1ployn1e11t or the

terms of employment or with the conditions of labour, of any person'.

We are unable to imagine a tort liability or compensation claim based

on loss of business being regarded as an industrial dispute as defined

in the Act, having regard to the language nsed, the setting and pur­

pose of the statute and the industrial flavour of

the dispute as one

between the management

and workmen. D

In this context, we are strengthened in our conclusion by the

pro··

visions of s. 33C which provides for speedy recovery of money due

to a worktnan fro1n an e1nployer under a scttlen1ent or an award~ but

not for the converse case of money due to an employer from workmen.

There

is no provision in the Act which contemplates a claim for

money by an employer from the workmen. And indeed, it

may be E

a little startling to find such a provision, having regard to workmen

being the weaker section and Part IV of the Constitution being loaded

in their favour. The new light shed by the benign clauses of Part IV

must illumine even pre-Independence statutes in the interpretative

process. As yet, and hopefully, claims by employers against workmen

on ground of tortious liability have not found a place in the pharma-

copoeia of Indian Industrial Law. However, as earlier stated, we do F

not pronounce finally as it is not necessary.

There was argument at the bar that the High Court

was in

error

in relying on s. 18 of the Trade Unions Act, 1926 to rebuff the claim

for compensation. We have listened to the arguments of Shri B.C.

Ghosh in support of the view of

the High Court, understood on a

wider basis. Nevertheless,

we do not wish to rest our judgment on

that ground. Counsel for the appellants cited some decisions to show

G

that an award falling outside the orbit of the Indian Arbitration Act

can be enforced by action in court.

We do not think the problem

so posed arises in the instant case.

We dismiss the appeal but, in the circumstances, there will be no

order

as to costs.

P.H.P. Appeal dismissed.

(lj 11949] (L. L. J. 245.

H