Samyukta Khadan Maidoor Sangh v. Hindustan Steel Limited

SlNGH J.

(1.) This opinion will govern the disposal of Miscellaneous Petitions Nos. 334, 239 and 413 all of 1969. These petitions have come up before me on a difference of opinion between Honble the Chief Justice and Honble Tare, J.

(2.) All these petitions are directed against a settlement arrived at between the Steel Workers Union, Bhilai and the Management of Bhilai Steel Plant on April 3, 1969. The relief claimed in the petitions substantially is that the settlement be quashed and the Management be ordered by a writ of mandamus not to give effect to the same.

(3.) The facts are that Hindustan Steel limited is a company in the public sector. The company owns three Steel Plants one at Raurkela in Orissa, another at Durgapur in West Bengal and the third at Bhilai in Madhya Pradesh. For supply of raw-materials needed in the manufacture of iron and steel in the Bhilai Steel Plant the company owns three mines. These mines are at Rajhara, Nandini and Hirri. Rajhara is at a distance of eighty miles, from Bhilai and Nandini is at a distance of forty-two miles. Bhilai as also Rajhara and Nandini are in District Durg. Rajhara mine supplies iron-ore and Nandini supplies Flux grade limestone. Hirri is a Dolomite mine and is situated in District Bilaspur. The minerals extracted from all the three mines are solely utilised by the Bhilai Steel Plant in the manufacture of iron and steel. These mines are captive mines and the mining leases were granted by the Central Government to the company for extracting the minerals for purposes of utilisation in Bhilai Steel Plant. The company has a number of departments at Bhilai, such as Medical and Public Health, Education, Stores, Construction, Security and Fire Brigade, Ministerial staff etc. The employees of these departments are called Common Cadre Personnel and some of them are also posted at the site of the mines. In addition to the Common Cadre Personnel there are other persons employed in the mines for working the mines.

(4.) The company paid to the Common Cadre Personnel posted at the site of the mines and to other personnel employed in the mines an allowance known as "mining allowance." The exact origin of the allowance is not known from the record, but from the General Managers Order No. 103 dated October 16, 1961 (Annexure A in M. P. No. 334) it appears that this mining allowance was granted sometime in 1959 and was known as a special allowance. The rates of this allowance were revised by the Committee of Management on November 1, 1960, The allowance is referred to as "mines allowance" in the General Managers Order No. 103. The rates of this allowance were again revised by General Managers Order No. 135 dated December 30, 1961 (Annexure B in M. P. No. 334). In this order the allowance is referred to as "mining allowance."

(5.) The recommendations of the Iron and Steel Wage Board as regards the wage structure in Iron and Steel Industry were applied to the entire Common Cadre Personnel, whether working at Bhilai or at the site of the mines. By a settlement dated June 23, 1967, the wage structure recommended by the Iron and Steel Wage Board was also made applicable to the workers employed in the mines from January 1, 1967. In this settlement, which was between the Management and Unions representing the workmen employed in the mines, two matters in dispute could not be settled and it was agreed that they be referred to adjudication under section 10 (2) of the Industrial Disputes Act, 1947. These two matters were : (i) Whether in view of the application of the recommendations of the Wage Board for Iron and Steel Industry to the mines the workers in the mines were entitled to any mining allowance ; and (ii) whether the wage structure contained in the recommendations of the Wage Board for Iron and Steel Industry applicable to the Steel Industry with effect from 1st April 1965 and which the Management agreed to apply to the mining establishments from 1st January 1967 should be made applicable to the mining establishments from 1st April 1965.

(6.) The Management and the Unions representing the workmen in the mines made a joint application to the Central Government to refer the aforesaid two matters for adjudication. In pursuance of this application, the Central Government on September 7, 1967, referred the aforesaid dispute to the Central Government Industrial Tribunal, Jabalpur. The Tribunal decided the dispute by its award dated August 20, 1968. It was held by the Tribunal that the workmen in the mines were entitled to the wages as recommended by Iron and Steel Wage Board from 1st April 1955. It was further held that the workmen were also entitled to continue to receive mining allowance until that benefit was not withdrawn as regards the Common Cadre Staff. The reasoning of the Tribunal was that the workmen employed in the mines should be given same benefits which were received by the Common Cadre Staff posted at the mines.

(7.) This award was challenged by the Management in the High Court in Misc. Petition No. 462 of 1968. The Unions representing the workmen employed in the mines, who were the respondents in the said petition, and the Management entered into a compromise on the following terms : (1) That the management will pay 50% of the arrears payable according to the recommendations of the Iron and Steel Wage Board for the period from 1-4-1965 to 31-12-1966 to the concerned workmen. (2) That the management shall pay mining allowance to the workers concerned as due to them upto 31-12-1968 and thereafter subject to clause (3) below. (3) That as for the mining allowance for the subsequent period, the parties agree to abide by such decision as may be concluded between the management and the union representing the common cadre personnel from the date of settlement or award as the case may be. An application was made in M. P. No. 462 of 1968 by the Management and the Unions that the award of the Industrial Tribunal dated August 20, 1963 be modified on the terms stated above. The High Court by its order dated February 11, 1969, accepted this application and the award of the Tribunal was accordingly modified.

(8.) Thereafter, on March 5, 1969, the Management issued a notice of change under section 31 (1) of the Madhya Pradesh Industrial Relations Act, 1960. In this notice the Management desired to discontinue the mining allowance paid to the Common Cadre Staff posted at the mines with effect from January 1, 1969. This notice of change was served on the Steel Workers Union which is a representative union registered under the Madhya Pradesh Industrial Relations Act. A settlement was thereafter arrived at on April 3, 1969, between the Management and the Steel Workers Union. In this settlement it was agreed that the mining allowance paid to the Common Cadre Staff posted at the mines be discontinued from April 1, 1969. It is this settlement which is challenged in these petitions.

(9.) The contention of the petitioners is that the Common Cadre Staff posted at the site of the mines cannot be said to be employed in Iron and Steel Industry and must be held to be employed in Mining Industry and the Madhya Pradesh Industrial Relations Act is not applicable to them and any settlement arrived at in the manner provided in the Madhya Pradesh Act is invalid. Another ground which really follows from the first ground itself is that the Industrial Disputes Act, 1947 is applicable to the Common Cadre Workers posted at the mines and as this Act does not recognise any representative union with any preferential claim of representation, notice of change should have been issued to all the trade unions and the Steel Workers Union alone was not competent to represent the personnel employed at the mines.

(10.) The petitions were heard by a Bench consisting of Honble the Chief Justice and Honble Tare, J. who differed in their conclusions. The learned Chief Justice was of the opinion that the Common Cadre Staff posted at the mines could not be said to be employed in the mines and the Industrial Disputes Act did not apply to them and they were governed by the Madhya Pradesh Industrial Relations Act. It was also held that the Steel Workers Union being a representative Union under the State Act, was competent to represent the Common Cadre Staff posted at the mines. In the opinion of the Chief Justice the settlement was valid and binding on the Common Cadre Personnel. Differing from Honble the Chief Justice, Honble Tare, J. held that the Common Cadre Staff posted at the mines was governed by the Industrial Disputes Act and the Steel Workers Union alone was not competent to represent them and the settlement was not binding. In view of the difference of opinion between them the learned Judges formulated the following points of difference : (1) Whether the notice of change dated 5-3-1969 (Petitioners Annexure-J in M. P. No. 334 of 1969) under section 31 (1) of the M. P. Industrial Relations Act, 1960, given by the employer to the Steel Workers Union, Bhilai a representative Union recognised under the State Act, to discontinue the Mining Allowance payable to members of the common cadre pool staff posted at the surface of the mines was a valid notice or whether notice could be given to the Registered Trade Unions only under section 9A of the (Central) Industrial Disputes Act, 1947. (2) Whether the agreement dated 3-4-1969 (Petitioners Annexure-I, in M. P. No. 334 of 1969) between the employer and the General Secretary of the Steel Workers Union, Bhilai, a representative Union recognised under the State Act, to discontinue Mining Allowance payable to members of the Common Cadre Pool staff posted at the surface of the mines is a valid agreement between two competent parties or whether an agreement, award or adjudication could be effected only between the employer and the registered Trade Union or Union representing the members of the common cadre pool staff posted at the surface of the mines under the (Central) Industrial Disputes Act. (3) Whether the Steel Workers Union, Bhilai a representative union recognised under the State Act, could under the relevant law applicable to the instant case represent the members of the common cadre pool staff posted at the surface of the mines by resorting to the provisions of the M. P. Industrial Relations Act. 1960, or whether the question of representation is governed by section 36 of the (Central) Industrial Disputes Act, 1947."

(11.) Before proceeding to consider the points involved in these petitions it is necessary to refer to certain statutory provisions. Section 1 (3) of the Madhya Pradesh Industrial Relations Act, 1960, hereinafter referred to as the State Act, reads as follows:

"Section 1 (3). This section and section 112 shall come into force at once and the State Government may, by notification, bring all or any of the remaining provisions of this Act into force in respect of- (a) any or all industries; or (b) Undertakings in any industry wherein the number of employees, on any day during twelve months preceding or on the date of the notification or on any day thereafter, was or is more than such number as may be specified in such notification, on such date as may be specified therein."

In exercise of the powers conferred by the aforesaid provision the State Government issued the following notification on December 31, 1960: "No. 9952-XVI, dated 31 December, 1960. In exercise of the powers conferred by sub-section (3) of section 1 of the Madhya Pradesh Industrial Relations Act, 1960 (No. 27 of 1960), the State Government hereby directs that all the provisions of the said Act other than sections 1 and 112 thereof shall come into force on the 31st December 1960, in respect of undertaking in the industries specified in the Schedule below wherein the number of employees on any date during twelve months preceding or on the date of this notification or any day thereafter was or is more than one hundred. SCHEDULE 1. Textile including cotton, silk, artificial silk, staple fibre, jute and carpet. 2. Iron and Steel 3. Electrical Goods 4. Sugar 5. Rice Mills 6. Oil Mills 7. Cement 8. Potteries 9. Lime Industry 10. Electricity generation and distribution 11. Printing Presses 12. Paper and Straw Board 13. Asbestos cement 14. Shellace 15. Public Motor Transport 16. Engineering 17. Flour Mills 18. Biscuit and Confectionery 19. Glass 20. Starch 21. Vegetable Oil 22. Rubber." In view of this notification, the State Act applies to undertakings in the industry of iron and steel. The list in the Schedule does not include mining industry as one of the industries to which the Act is to apply.

(12.) Section 2 of the State Act contains definition of the word "Employee" which reads :

"Section 2 (13). "Employee" means any person employed in an industry to do any skilled, unskilled, manual, supervisory, technical or clerical work for hire or reward, whether the terms of employment be express or implied, and includes-"

Chapter III of the Act makes provision for recognition of representative unions. The scheme in sections 13 and 14 and other sections occurring in this Chapter is that out of various Unions of employees applying for recognition under this Chapter the Union having the largest membership of employees is to be recognised and registered as a representative union. As provided in section 27 a representative union of employees has a preferential right of representation as against other Unions.

(13.) Section 31 of the State Act deals with a notice of change. Under this section an employer intending to effect any change in respect of an industrial matter which includes wages, has to give a notice of such intention to the representative of employees. If any proposed change is not accepted, provision is made for conciliation proceedings in Chapter VIII. Section 4:3 occurring in this Chapter deals with settlement of dispute raised by the proposed change. A settlement comes into operation from the date agreed upon and when no such date is agreed, from the date when it is recorded in the register by the Registrar. Under section 97 a registered settlement is binding upon all persons who are parties and in the case of any representative union of employees which is a party to such settlement, all employees represented by it are bound by the settlement.

(14.) The corresponding provisions of the Industrial Disputes Act, 1947, hereinafter referred to as the Central Act, may now be seen. The Act extends to the whole of India. The definition of the word "Workman" in this Act reads as under : "Workman" means any person (including an apprentice) employed in any industry to do any skilled or unskilled manual, supervisory, technical or clerical work for hire or reward, whether the terms of employment be expressed or implied, and for the purposes of any proceeding under this Act in relation to an industrial dispute, includes-" Section 9-A of this Act provides for a notice of change before an employer can change the conditions of service applicable to the workmen. The notice is to be given to the workmen likely to be affected by such change. Section 36 of the Act deals with representation of parties and a workman can be represented by an officer or registered trade union of which he is a member. The Act does not make any provision for recognition of representative unions and consequently a notice of change under section 9-A has to be served on all the registered Trade Unions which have membership amongst the workmen likely to be affected by the change. In case of dispute, provision for conciliation is made in sections 12 and 13 with a view to bring about a settlement between the parties.

(15.) The main point argued by the learned Advocate General and Shri Gupta, who appeared for the petitioners, is that the respondent Company carried on two industries one of Iron and Steel and the other of Mining and the Common Cadre Personnel posted at the mines must be held to be employed in the Mining Industry and not in the Industry of Iron and Steel and, therefore, the State Act was not applicable to them. In reply, Shri Chitaley, learned counsel for the Management, submitted that the Company was engaged only in the Industry of Iron and Steel. It was argued that the activity of mining undertaken by the company is only a step for production of iron and steel and not a separate industry, for the minerals extracted are solely for utilisation in the manufacture of iron and steel in the Bhilai Steel Plant. Alternatively, the learned counsel submitted that the Common Cadre Personnel posted at the mines were not employed in the mines but were employed in the Iron and Steel Industry and the State Act applied to them.

(16.) The word Industry" as defined in the State Act and the Central Act has a comprehensive import and it is not disputed that the mining activity carried on by the company for the extraction of minerals is within the definition of industry. The first question that falls for decision on this aspect of the case is whether the mining activity for extraction of raw-materials can be said to be included within the Industry of Iron and Steel so as to attract the operation of the State Act.

(17.) I have already quoted the notification issued under section 1 (3) of the State Act. By virtue of the notification the State Act applies to undertakings in the "industries" specified in the Schedule to the notification. One of the industries so specified is "Iron and Steel." In a wide sense, Industry of Iron and Steel is capable of comprising (1) Extraction or production of raw materials ; (2) The process of manufacture of production of iron and Steel; and (3) their distribution. In a limited sense, however, the extraction or production of raw-materials will not be comprehended within the industry of Iron and Steel, although it may itself constitute a separate industry. As an example of the wide use of the expression "Iron and Steel Industry" reference may be made to an English Act, the Iron and Steel Act, 1S53, (1 and 2 Eliz. 2 C. 15) which uses the expression to include the quarrying or mining of iron ore: [see Halsuburys Laws of England 3rd edition, vol. 38, p 297]. On the other hand, industries specified in the first Schedule to the Industries (Development and Regulation) Act, 1951, which include industry of Iron and Steel, do not comprehend production of raw-materials ; [see Tika Ramji v. State of U. P.(AIR 1956 SC 676 [LQ/SC/1956/37] , pp. 700, 701, 702.) and Harakchand v. Union of India(AIR 1970 SC 1453 [LQ/SC/1969/206] , p. 1459.)]. The point then is whether the notification issued under the State Act specifies the industries in a limited sense or in a wide sense. The State Act, as expressed in its long title, is an Act to regulate the relations of employees in certain matters, to make provision for settlement of industrial disputes and to provide certain other matters connected therewith ; it covers the same field which is covered by the Central Act. The subject matter of the two Acts falls under the concurrent list and as the State Act was assented to by the President, it displaces the application of the Central Act to the industries to which it (the State Act) is applied by notification under section 1 (3). As the Central Act applies to all the industries, its displacement by the State Act in relation to a particular industry has to be shown by a clear specification of the industry concerned in the notification issued under the Slate Act. In this background the notification under section 1 (3) of the State Act has to be construed in a limited sense ; see R. N. Mishra v. W. Manager, B. and C.(1966 MPLJ 601 p 603 (Para 4)) and Jamul C. Works v. State Industrial Court(1968 MPLJ 95 [LQ/MPHC/1967/163] , p. 99). Further the items specified in the notification by themselves contain an indication that they do not include within themselves raw-materials. For example, items like "sugar", "Rice Mills" and "Oil Mills" cannot possibly be. construed to include within themselves the production of sugarcane, paddy or oil seeds. It was contended by the learned counsel for the Management that in case of an employer who carries on mining activity for extraction of raw-materials to be utilised solely by him in the manufacture of iron and steel and not for sale, the mining activity gets inextricably connected with the production of iron and steel and becomes a part of it. If this argument were to be accepted, the Iron and Steel Industry specified in the notification will have different content in different situations leading to anomalies. For example in case of an employer who carries on mining of iron-ore and other minerals for sale the industry carried on by him will not be that of iron and steel and the employees engaged in the mining industry will be governed by the Central Act. But in case of an employer who himself utilises the ore and other minerals in the production of iron and steel the mining activity will be part of industry of iron and steel and even the employees employed in the mining of the minerals will be governed by the State Act. There is no reason why the workmen engaged in mining should in one case be governed by the State Act and in the other by the Central Act. Such a result could not have been intended by the State Government in specifying the industry of Iron and Steel in the notification. Having regard to all these considerations, the more reasonable view to adopt is that specification of Iron and Steel Industry by the Government in the notification is in a limited sense and the extraction of Iron-ore or other raw-materials needed in the manufacture of Iron and Steel is not included in the said industry.

(18.) Reference was made by the learned counsel to the case of Associated Cement Cos. v. Their Workmen(AIR 1960 SC 56 [LQ/SC/1959/159 ;] ) where it was held that a cement factory and an adjacent mine supplying raw-material exclusively to the factory and owned by the same-employer constituted one establishment for payment of lay-off compensation under section 25 F of the Central Act. It was laid down that the question whether two units constitute one establishment should be answered by applying the tests of geographical proximity, unity of ownership, management and control, unity of employment, functional integrity and general unity of purpose. This case has no bearing on the question in issue in the present petitions whether specification of industries in the notification issued under the State Act should be understood in a broad or a narrow sense.

(19.) It may. also be mentioned that the view taken by me that the extraction of raw-materials is not included in the Industry of Iron and Steel as specified in the notification is also in harmony with an important admission made by the Management in their return (paragraph 18 in M. P. No. 334) that the State Act is inapplicable to the workmen employed in the mines.

(20.) Now, having regard to the limited meaning of Iron and Steel Industry as specified in the notification the activities of the company fall under two divisions : (1) Manufacture and production of iron, steel and other operations connected with it, i.e. Iron and Steel Industry governed by the State Act ; and (2) Extraction of minerals and operations connected with it, i.e. Mining Industry governed by the Central Act. This brings us to the second question whether the Common Cadre Personnel posted at the site of the mines are employed in Iron and Steel Industry or in Mining Industry. In this connection it is pointed out by the Management that the Common Cadre staff posted at the different mines of the company consists of the staff of various departments of the company such as Medical and Public Health, Education, Stores, Construction, Security and Fire Brigade, the Ministerial staff etc., that these employees are under the control of the heads of departments of the company at Bhilai, that they are transferable from the site of the mines to the Steel Plant at Bhilai, and that for purposes of seniority and promotions they are graded with other Common Cadre Staff of the company. These incidents of the Common Cadre Personnel arise because the Steel Plant and the mines are owned by the same employer and an employee whether posted at Bhilai or at the mines is employed under the same employer. These incidents, however, do not answer the question whether the employees of this cadre while posted at the mines are employed in Iron and Steel Industry or in Mining Industry of the company. The expression "employed in any industry" which occurs in the definition of employee in the State Act and Workmen in the Central Act has been construed by the Supreme Court to include persons employed in operations incidental to the industry; [see J. K. Cotton Sp. and WVG. Mills Co. v. L. A. Tribunal of India(AIR 1964 SC 737 [LQ/SC/1963/157] )]. The employees of the Common Cadre Personnel, whether at Bhilai or at the mines, are not directly engaged either in the manufacture of iron and steel or in the extraction of the minerals. There work is incidental. While posted at Bhilai they are employed in operations incidental to Iron and Steel Industry and when posted at the mines they are employed in operations incidental to Mining Industry. For example a clerk who works in the Factorys office of Bhilai Steel Plant does clerical work incidental to the Iron and Steel Industry; whereas, if the same clerk is transferred to the offices of the Mines, the clerical work done by him is incidental to Mining Industry. Similar is the position with regard to the personnel of other departments of the Common Cadre. The members of the Common Cadre Staff while posted at the mines do the work incidental to the Mining Industry and must be held to be employed in the said industry.

(21.) Reference was made by the learned counsel for the Management to the definition of the expression employed in the mine" in the Mines Act, 1952, and it was submitted that the Common Cadre Personnel do not fall within that definition. Reliance was also placed on the case of Serajuddin and Co. v. Workmen(AIR 1966 SC 921 [LQ/SC/1962/123] ) The expression "employed in a mine" has a narrower content than the expression "employed in Mining Industry", therefore, the definition of the former expression in the Mines Act has no relevance in these petitions. Serajuddins case was concerned with the expression "industrial dispute concerning a mine" and it was held that an industrial dispute relating to the employees working in the Head Office was not an "industrial dispute concerning a mine" and the State Government was the appropriate Government for making a reference under section 2 (a) of the Central Act. This case again is not relevant to the point arising in the present case where the question to be decided is not whether the impugned settlement related to a dispute "concerning the mines" but whether the dispute related to workmen employed in Mining Industry. The case more in point is Ballarpur Collieries v. Industrial Court(AIR 1966 SC 925 [LQ/SC/1965/319] ) where it was held distinguishing Serajuddins case that Head Office of a colliery was included within Mining Industry. Similarly, in J. K.Cotton SpG. and WvG. Mills Cos case, which had already beed noticed, Malis employed by the Mills to look after the garden of the bungalows occupied by its officers were held to be engaged in operations incidentally connected with the industry carried on by the Mills thus falling within the definition of workmen in the Central Act. These cases go to show that simply because the members of the Common Cadre Staff at the mines are not directly engaged in mining operations, it cannot be said that they are not engaged in Mining Industry. The very fact that while posted at the mines they receive mining allowance goes to show that their work is incidentical to Mining Industry and they are employed in that Industry.

(22.) It was also argued that the wage structure recommended by the Iron and Steel Industry was applied to the Common Cadre Staff at the mines which shows that they were treated as employed in the Industry of Iron and Steel. This consideration is not of much importance because the wage structure recommended by the Iron and Steel Wage Board may have been applied with a view to have uniform conditions of service in the Common Cadre. It will be noticed that the benefit of the wage structure recommended by the Iron and Steel Wage Board was extended by settlement even to employees in actual mining operations. Therefore, the application of the wage structure of Iron and Steel Industry recommended by the Wage Board is not very material to the question whether the Common Cadre Personnel at the site of the mines are engaged in Iron and Steel Industry or in Mining Industry and does not militate against the conclusion reached by me that such staff is employed in Mining Industry.

(23.) On the finding that the Common Cadre Staff at the mines is employed in Mining Industry and not in the Industry of Iron and Steel, it logically follows that the State Act is inapplicable to them and the Management should have adopted the procedure and the machinery of the Central Act for arriving at a settlement with these workmen. Instead of issuing a notice of change under section 31 of the State Act to a representative Union of employees the notice should have been issued under section 9A of the Central Act to all the Trade Unions representing the workmen, for the Central Act does not recognise any representative Union with preferential right of representation. Therefore, the settlement arrived at by the Management under the State Act with the Steel Workers Union alone as a representative Union is invalid. For these reasons, I agree with the conclusion of Honble Tare, J that the petitions be allowed and the settlement be quashed. My opinion on the points of difference is as follows : Point No. 1 : The notice under section 31 of the State Act was not valid and notice should have been issued under section 9A of the Central Act. Point No. 2 : The settlement is invalid. Point No. 3: The Steel Workers Union could not claim any preferential right of representation under the State Act as the question of representation was governed by the Central Act.

(24.) Before concluding, it is desirable to mention that two other points were also argued before me, but on the findings reached by me I do not find it necessary to decide them These points are : (1) The Steel Workers Union ceased to be a representative union under the State Act after its amendment by Ordinance No. 16 of 1968. (2) In any case, the said Union could not act as a representative Union for the workmen posted at Hirri mine.

(25.) The petitions shall now be placed before the Bench for final disposal.

(26.) This order shall also govern the disposal of Misc. Petition No. 239 of 1969 and No. 413 of 1969.

(27.) These are three connected writ petitions by workers and the union of workers in some mines worked by the Hindustan Steel Ltd. There was a difference of opinion between us and the matter was referred for opinion to a third Judge. Now, that opinion has been received. In view of the majority opinion, ail these writ petitions are allowed. The settlement between the Management and the General Secretary, Steel Workers Union, dated 3rd April 1969 is quashed The workers will be entitled to the mining allowance as it was paid to them before the settlement. If any amount has been paid to some of the workers by way of ex gratia payment, it will be adjusted towards the payments which will now be made.

(28.) Parties will bear their own costs in all the three petitions. The outstanding amount of the security deposit shall be refunded to the petitioners in all the three cases. Petitions allowed.