1962 Supreme(Pat) 48

PATNA HIGH COURT
V.Ramaswami and N.L.Untwalia JJ.
Rohtas Industries Staff Union
Versus
State Of Bihar
Miscellaneous Judicial Case No. 475 of 1959 ; 498 of 1959 ;
Decided On : MAY 02, 1962

The question of compensation payable by the workmen to the employer for the loss caused by a strike does not come within the purview of Sec.10-A of the Industrial Disputes Act, and such a claim of the employer cannot fall within the definition of "industrial dispute" under Sec.2 (k) of the statute.

Headnote:

INDUSTRIAL DISPUTES ACT - SECTION 10-A - ARBITRATION - AWARD - COMPENSATION TO EMPLOYERS FOR LOSS OF BUSINESS DUE TO STRIKE - WHETHER WITHIN THE SCOPE OF SECTION 10-A - WHETHER ARBITRATORS COMMITTED AN ERROR OF LAW IN HOLDING THAT THE WORKERS WERE LIABLE FOR PAYING COMPENSATION TO THE COMPANIES CONCERNED - WHETHER ARBITRATORS COMMITTED AN ERROR OF LAW IN HOLDING THAT THE WORKERS WERE NOT PROTECTED BY THE IMMUNITY GRANTED UNDER SECTION 18 OF THE TRADE UNIONS ACT - WHETHER THE COMPANIES HAD A RIGHT OF CIVIL ACTION FOR DAMAGES AGAINST THE WORKERS WHO HAD TAKEN PART IN AN ILLEGAL STRIKE.

Fact of the Case:

A strike was started in the factories of the Rohtas Industries Limited on the 3rd September, 1957, and it was called off on the 3rd October, 1957, on the basis of an agreement between the management and the workers dated the 2nd October, 1957. By this agreement the parties agreed to refer certain matters in dispute to arbitration. Under Sec.10-A of the Industrial Disputes Act the Government of Bihar published the arbitration agreement in the Bihar Gazette. The arbitration agreement is to the following effect: "Agreement under Sec.10-A of the Industrial Disputes Act, 1947 , between Rohtas Industries Limited and its workmen. Representing Employers --Rohtas Industries Ltd., Dalmianagar. Representing Workmen. - (1) Rohtas Industries Mazdoor Sangh, Dalmianagar, (2) Rohtas Industries Staff Union, Dalmianagar, (3) Dalmianagar Staff Employees Union, Dalmianagar, (4) Dalmianagar Mazdoor Seva Sangh, Dalmianagar, It is hereby agreed between the parties to refer the following industrial disputes to the arbitration of Shri J. N. Mazumdar, Ex. Judge, Calcutta High Court, and Ex. Chairman, Labour Appellate Tribunal of India, 63/1/2, Lansdown Road, Calcutta, and Shri R. C. Mitter, Ex. Judge, Calcutta High Court and Ex. Chairman, Labour Appellate Tribunal of India, 5-A, Old Mayors Court, Calcutta : (i)Specific matter in dispute...Issues arising out of para-graph 7 of the Agreement dated 2nd October, 1957. reproduced below : "The employees claim for wages and salaries for the period of strike and the Companys claim for compensation for losses due to strike shall be submitted for arbitration of Shri J. N. Mazumdar and Shri 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 be final and binding on all the parties." (ii)Details of the parties to the dispute...The Rohtas Industries Ltd. Dalmianagar and their workmen. (iii)Name of the Unions representing the workmen...1.Rohtas Industries Maz-door Sangh, Dalmianagar, 2.Rohtas Industries Staff Union, Dalmianagar, 3.Dalmianagar Staff Em-ployees Union, Dalmianagar. 4.Dalmianagar Maadoor Seva Sangh, Dalmianagar. (iv)Total number of work men employed in Rohtas Industries Limited...About 5,500 (v)Estimated number of workmen likely to be affected by the dispute...About 5,500" According to Clause 7 of the agreement, the claim of the workers for wages and salaries for the period of the strike and the claim of the Company for compensation for loss of production due to strike were to be submitted for arbitration of Sri J. N. Mazumdar and Sri R. C. Mitter, former High Court Judges and Ex. Members of the Labour Appellate Tribunal of India, as joint arbitrators. On the 20th April, 1959, the arbitrators gave an award and sent the same for publication to the Government of Bihar. In this award the arbitrators decided all the issues against the trade unions and held that compensation should be paid by the workers who had gone on strike to the Rohtas Industries Limited to the extent of Rs. 6,90,000.00 and to the Ashoka Cement Works Limited to the extent of Rs. 80,000. The arbitrators also decided that the cost of arbitration should be divided equally between the employers and the trade unions concerned. The petitioners have obtained a rule from the High Court asking the respondents to show cause why the award of the arbitrators dated the 20th April, 1959, should not be quashed by a writ in the nature of certiorari under Article 226 of the Constitution.

Finding of the Court:

The court held that the arbitrators committed an error of law in holding that the workers were liable for paying compensation to the Companies concerned. The court also held that the arbitrators committed an error of law in holding that the workers were not protected by the immunity granted under Section 18 of the Trade Unions Act. The court further held that the Companies had no right of civil action for damages against the workers who had taken part in an illegal strike.

Issues: 1. Whether the question of compensation payable by the workmen to the employer for the loss caused by a strike comes within the purview of Sec.10-A of the Industrial Disputes Act? 2. Whether the arbitrators committed an error of law in holding that the workers were liable for paying compensation to the Companies concerned? 3. Whether the arbitrators committed an error of law in holding that the workers were not protected by the immunity granted under Section 18 of the Trade Unions Act? 4. Whether the Companies had a right of civil action for damages against the workers who had taken part in an illegal strike?

Ratio Decidendi: 1. The court held that the question of compensation payable by the workmen to the employer for the loss caused by a strike does not come within the purview of Sec.10-A of the Industrial Disputes Act, and such a claim of the employer cannot fall within the definition of "industrial dispute" under Sec.2 (k) of the statute. 2. The court held that the arbitrators committed an error of law in holding that the workers were liable for paying compensation to the Companies concerned because they failed to apply the principle of law laid down by the House of Lords in 1942-1 All ER 42, which states that the test for determining liability in a case of conspiracy is not the natural result to the employers of such combined action or the resulting damage to the employers, but what is in truth the object in the minds of the workmen when they acted as they did. 3. The court held that the arbitrators committed an error of law in holding that the workers were not protected by the immunity granted under Section 18 of the Trade Unions Act because the strike was illegal under Section 24 (i) of the Industrial Disputes Act. The court held that the question whether the strike was legal or illegal under Sec.24 (1) of the Industrial Disputes Act has no bearing on the question of immunity furnished by Sec.18 of the Trade Unions Act. 4. The court held that the Companies had no right of civil action for damages against the workers who had taken part in an illegal strike because the duty imposed upon the employees and the employers by Sections 23 and 24 of the Industrial Disputes Act was a public duty only to be enforced by the penalty imposed for a breach of it, and not otherwise.

Final Decision: The court allowed the applications and quashed the award of the arbitrators in all the five references under Sec.10A of the Industrial Disputes Act so far as they granted compensation to the employers by the workmen participating in the strike for the losses due to the strike.