1. Application for amendment of certified Standing Orders under the Industrial Employment (Standing Orders) Act, 1946, to introduce different leave and holiday rules for new and existing employees. (Para 1 , 2 , 3 , 4 )
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1965 Supreme(SC) 284
SUPREME COURT OF INDIA
P.B. GAJENDRAGADKAR, C.J.I., K.N. WANCHOO, M. HIDAYATULLAH AND V. RAMASWAMI, JJ.
Salem-Erode Electricity Distribution Co., (P) Ltd., Appellant
Versus
Their Employees Union Respondents.
Civil Appeal No. 305 of 1964.
Advocates appeared
Mr. M. C. Setalvad, Senior Advocate (Mr. Naunit Lal, Advocate, with him), for Appellant; M/s. M. K. Ramamurthi, R. K. Garg, D. P. Singh and S. C. Agarwala, Advocates of M/s. M. K. Ramamurthi and Co., for Respondents.
Advocates:
D.P.Singh, M.C.SETALVAD, M.K.RAMAMURTHY, NAUNIT LAL, R.K.GARG, S.C.AGRAWAL
D.P.Singh, M.C.SETALVAD, M.K.RAMAMURTHY, NAUNIT LAL, R.K.GARG, S.C.AGRAWAL
An industrial establishment cannot have two different sets of certified Standing Orders for the same matters listed in the Schedule of the Industrial Employment (Standing Orders) Act, 1946, as the Act mandates uniformity of employment terms for all workmen in the establishment.
Headnote:(A) Industrial Employment (Standing Orders) Act, 1946 - Sections 2, 3, 4, 5, 10(2) and 13-A - Certification of Standing Orders - Uniformity of terms and conditions - Whether an industrial establishment can have two different sets of certified Standing Orders for employees based on their date of joining - The object of the Act is to require employers to define formally the terms and conditions of employment to ensure they are well-defined and known to employees before acceptance - One of the primary objects is to introduce uniformity of terms and conditions for workmen belonging to the same category discharging similar work (Para 8) - Matters specified in the Schedule to the Act are intended to be covered by uniform Standing Orders applicable to all workmen in an industrial establishment (Para 15) - Permitting different sets of Standing Orders based on the date of employment would lead to confusion and industrial dissatisfaction (Para 17) - The Act provides a self-contained code for certification, modification, and interpretation of Standing Orders (Para 19).
(B) Industrial Adjudication - Distinction between proceedings under the Standing Orders Act and disputes under the Industrial Disputes Act - Principles governing industrial awards regarding uniformity of service conditions are not necessarily applicable to the statutory process of certification of Standing Orders (Paras 23, 25).
Facts of the case:
An employer sought to amend certified Standing Orders regarding leave and holidays to apply different rules to employees who joined before a specific date and those who joined after. The employees' union resisted the change, arguing it was unfair, unreasonable, and discriminatory. The Certifying Officer and the appellate authority refused to certify the amended orders, leading to the present appeal.
Findings of Court:
The court held that the statutory scheme of the Act does not permit the existence of two separate sets of Standing Orders for the same establishment regarding matters listed in the Schedule.
Issues: Whether it is permissible under the Industrial Employment (Standing Orders) Act, 1946, for an industrial establishment to have two different sets of certified Standing Orders governing the same terms and conditions of employment for different groups of employees based on their date of joining.
Ratio Decidendi: The Act aims to eliminate ad hoc agreements and introduce uniformity in employment terms. Since the matters in the Schedule (such as classification of workmen, leave, and holidays) are fundamental to the employment relationship, they must be governed by a single, uniform set of Standing Orders for all employees in the establishment to avoid confusion and disharmony. The court emphasized that the Act is a self-contained code and the requirement for uniformity overrides the employer's desire to apply different rules to future entrants.
Result: Appeal dismissed.
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2. Employer contends amendments are fair and reasonable for future entrants; employees argue they are unfair, unreasonable, and introduce discriminatory conditions causing industrial unrest. (Para 5 , 7 )
3. The Act aims to ensure uniformity of employment terms for similar categories of workmen to avoid ad hoc agreements and industrial disharmony. (Para 8 , 9 , 10 , 11 , 12 , 14 , 15 , 16 , 17 , 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25 )
4. An industrial establishment cannot have two different sets of certified Standing Orders governing the same matters specified in the Schedule for different groups of employees. (Para 13 , 15 , 16 , 17 )
5. Appeal dismissed with costs. (Para 26 )
6. Can an employer maintain two different sets of Standing Orders for employees based on their date of joining?
No. The object of the Industrial Employment (Standing Orders) Act, 1946, is to introduce uniformity in terms and conditions of employment for workmen in the same category. Having multiple sets of Standing Orders for the same matter would lead to confusion and dissatisfaction. (Para 8 , 13 , 15 , 16 , 17 )
7. What is the primary object of the Industrial Employment (Standing Orders) Act, 1946?
The Act requires employers in industrial establishments to formally define terms and conditions of employment, ensuring they are known to employees before acceptance and introducing uniformity across the same category of workmen. (Para 8 )
8. Does the Certifying Officer have the power to evaluate the fairness of Standing Orders?
Yes. Following the 1956 amendment, the Certifying Officer and the appellate authority have jurisdiction to adjudicate upon whether the provisions of the Standing Orders submitted for certification are fair or reasonable. (Para 11 )
9. How are disputes regarding the application or interpretation of certified Standing Orders resolved?
Under Section 13A of the Act, any question regarding the application or interpretation of certified Standing Orders may be referred by the employer or workmen to a designated Labour Court, whose decision is final and binding. (Para 18 , 19 )
Judgement
GAJENDRAGADKAR, C.J.I. : The appellant, Salem Erode Electricity Distribution Co. Ltd., is a licencee under the Indian Electricity Act, 1910, and its business consists in buying electrical energy in bulk from the State Electricity Board of Madras and selling it to consumers in Salem and Erode and certain rural districts in the State of Madras. For the purpose of carrying on this business, the appellant has an industrial establishment at Salem.
2. In or about 1940, when the number of the appellant s consumers was about 3,000, and that cf its workmen about 45, the appellant framed certain terms and conditions of its workmen s employment. Amongst these were included terms about leave and holidays. Later, when the Industrial Employment (Standing Orders) Act, 1946 (No. 20 of 1946) (hereinafter called the Act ) came into fore, the provisions as to leave and holidays which had been introduced by the appellant in the terms and conditions of the employment of its workmen, were embodied in the appellant s Standing Orders which were certified under the relevant provisions of the Act in or about 1947. The said terms read thus :-
"Standing Order 5 (b) - The number of holidays to be granted to the workmen and the days which shall be observed as holidays by the Establishment shall be regulated in accordance with the Factories Act, 1948 or other relevant law for time being in force and the custom or usage of the Establishment, viz., holidays under the Negotiable Instruments Act. 1881 and festival holidays peculiar to this locality which are being given.
Standing Order 10 (a) - Leave will be given in accordance with the law and existing practice provided the leave facilities now available to the worker are not curtailed in any manner."
3. The proceedings which have give rise to the present appeal by special leave between the appellant and the respondents, its employees, began with the application made by the appellant on the 6th October, 1960, before the Certifying Officer, Madras, for the amendment of the certified Standing Orders to which we have just referred. By its application, the management of the appellant wanted the said Orders to read thus:-
"Standing Order 5 (b) - For all workmen who have joined service prior to ........ holidays under the Negotiable Instruments Act, 1881, and festival holiday of one day per year which day may be chosen by the workmen shall be given. For all workmen who have joined on and after ....... holidays under the Madras Industrial Establishments (National and Festival holidays) Act, 1958, shall be given."
"Standing Order 10 (a) - Leave will be given to all employees who are appointed on and after ...... in accordance with the provisions of the Madras Shops and Establishments Act, 1947 or any statutory modification thereof (irrespective of whether this Act applies or not to any category of employees or employees). Provided, however, that for all employees who have been confirmed prior to the above said date, viz ....... The leave facilities now available are not curtailed in any manner."
4. It is relevant to mention the background of the present application. The appellant believed that the urgent need for increased production and for increased supply of electrical energy could be met if the existing rules embodied in Standing Orders 5 (b) and 10 (a) were suitably modified; and so, the appellant wanted to make the change in the said two Standing Orders on the lines indicated by it in its application to the Certifying Officer. It appears that these Rules were introduced by the appellant on the 1st October, 1960, and were embodied in the contracts of services of new entrants who joined the appellant s employment as from that date. In fact, they were agreed to by such new entrants. In order to regularise the steps taken by the appellant by revising the relevant Rules in respect of the new entrants to its employment, the appellant made the present application.
5. The change proposed to be made by the appellant i
