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Premier Automobiles Ltd. Vs. Engineering Mazdoor Sabha and Others - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtMumbai High Court
Decided On
Case NumberSp. C.A. No. 37 of 1977
Judge
Reported in(1982)IILLJ73Bom
ActsLabour Practices Act, 1971 - Sections 30 and 32; Industrial Disputes Act
AppellantPremier Automobiles Ltd.
RespondentEngineering Mazdoor Sabha and Others
Excerpt:
labour and industrial - agreement - sections 30 and 32 of labour practices act, 1971 and industrial disputes act - whether there was implied term in agreement of 1966 which enabled employees to ask for incentive payment beyond 91% - nothing to indicate that in 1966 when agreement was made it was within contemplation of parties that payment in excess of maximum stipulated under agreement would be made - provision for additional payment beyond 91% provided by agreement of 1971 and payments beyond 91% started after that - contention that there was implied right in agreement of 1966 to claim incentive payment beyond maximum misconceived. - [couto; m.l. pendse, jj.] in the first instance the order passed under s. 132(5) is an order of a summary nature and does not conclude the rights of the.....1. this petition is directed at an order passed by the industrial court at bombay on two complaints made under s. 28(1) of the maharashtra recognition of trade unions and prevention of unfair labour practices act, 1971 (hereinafter referred to as 'the act') and the decision of this petition turns on the construction of an agreement dated 31st december, 1966 entered into between a trade union by name engineering mazdoor sabha and the petitioner, the premier automobiles ltd. (hereinafter referred to as 'the employer').2. the agreement of 31st december, 1966 provides for a revision of incentive benefits payable to workmen in the employment of the employer. one of the various departments in the factory of the employer is known as motor production department. in 1964, there was a settlement.....
Judgment:

1. This petition is directed at an order passed by the Industrial Court at Bombay on two complaints made under S. 28(1) of the Maharashtra Recognition of Trade Unions and Prevention of unfair Labour Practices Act, 1971 (hereinafter referred to as 'the Act') and the decision of this petition turns on the construction of an agreement dated 31st December, 1966 entered into between a trade union by name Engineering Mazdoor Sabha and the petitioner, the Premier Automobiles Ltd. (hereinafter referred to as 'the employer').

2. The agreement of 31st December, 1966 provides for a revision of incentive benefits payable to workmen in the employment of the employer. One of the various departments in the factory of the employer is known as Motor Production Department. In 1964, there was a settlement which resulted in a production incentive scheme and to that settlement, the employer and the Engineering Mazdoor Sabha were parties. It was this settlement which was varied by the settlement of 31st December, 1956. When the settlement of 31st December, 1966 was made, the Motor Production Department of the employer had 425 workmen. The settlement which can be better referred to as 'the agreement' provided extra payment at the rate of 3.5% for 25 units over the basic production of 650 units up to the first target which was fixed at 900 units. Thus if the target of production reached 900 the increase in wages was to be 35%. In the second stage, the target was fixed at the level of 1250 units and the incentive payment was to be 4% for every 25 units over 900. Thus if the target of 1250 was reached, the additional wages would be increased by 56%. In a given case, therefore, if the maximum target was reached at 1250, the maximum production bonus payable to the employees was to be 91%.

3. For reasons which are not material for the purpose of this petition, the recognition of them Engineering Mazdoor Sabha was withdrawn some time in 1968. In September, 1970, 27 more persons were added in the Motor Production Department. The recognised union in 1970 was known as the Association of Engineering Workers (hereinafter referred to as the 'recognised union'). A new agreement was arrived at on 9th January, 1971 between the employer and the recognised union. Certain changes were introduced in the scheme as contemplated by the 1966 agreement. In place of the initial base of 650 units, the initial base was raised to 725 units. The second stage target was raised to 1325 units in place of 1250 units, though the percentage per 25 units was retained as in the 1966 agreement.

4. The employees of the employer had filed a suit in the City Civil Court at Bombay for a declaration that the employer was not entitled to enforce the agreement of 9th January, 1971 against the workers who were not members of the recognised union. It is enough to state that the suit came to be decreed after interim injunction was granted and an appeal filed against the order of the City Civil Court was dismissed. The employer filed Letters Patent appeal which was also dismissed and the employer then took the matter to the Supreme Court.

5. With regard to the departments other than the Motor Production Department, the employer entered into another agreement with the recognised union on 5th August 1971, which, however, covered the Motor production Department also along with all other departments of the employer's plant at Kurla. This agreement provided for payment by way of incentive if the production went beyond 1325 units as was provided for in the agreement of 9th January, 1971. The Hind Mazdoor Sabha challenged this agreement also by a similar suit filed in the City Civil Court which was also, decreed, and the decision was confirmed by this Court in First Appeal and a Letter Patent Appeal filed. During the pendency of the Letters Patent Appeal, the appeal filed before the Supreme Court in respect of the agreement dated 9th January, 1971 came to be decided. The Supreme Court allowed the employer's appeal, set aside both the judgments of the High Court, that is, the Letters Patent Appeal and the First Appeal as well as the judgment of the City Civil Court and dismissed the suit. The Supreme Court held that the only remedy available to the workmen concerned was the raising of an industrial dispute. 1975 I L.L.J. 445.

6. After the decision of the Supreme Court Appeal, the Letters Patent Appeal which was pending in this Court was taken up for hearing, being Letters Patent Appeal No. 49 of 1972 which arose as already pointed out, out of the second agreement. This Letters Patent Appeal came to be disposed of on 26th November, 1975. To certain parts of this judgment I shall refer later. For the present it will suffice to say that having regard to the decision of the Supreme Court, the Division Beach allowed the Letters Patent Appeal, set aside the orders in First Appeal and the suit was dismissed with costs.

7. After the decision of the Supreme Court in the first proceeding arising out of the agreement of 9th January, 1971, a complaint under the Act came to be filed before the Labour Court on 7th October, 1975. The complaint runs into about 20 pages, but, briefly stated, the grievance made in the complaint was that the employer is guilty of an unfair labour practice stated in item 9 of Schedule IV of the Act inasmuch as the employer has refused to implement the agreement of 31st December, 1966. Having regard to the nature of the contentions raised in this petition, it is necessary to reproduce the relevant part of the complaint which in paragraph 13 says as follows :

'The accused/respondent has failed and/or refused to implement the agreement between the complainant/applicant-union and the company and/or individual agreement between the accused/respondent and the individual workmen by unilaterally imposing and forcing the terms of the settlement dated 9th January, 1971.'

In paragraph 17 of the complaint it is stated as follows :

'The unfair labour practices have been resorted to or engaged in daily after 8th September, 1975. The previous settlement and/or individual agreements have not been terminated nor a notice of change has been given. Hence the accused/respondent are clearly obliged to implement the same but they have failed to do so.'

Substantially two reliefs have been asked for in the complaint, namely that the employer 'be ordered and directed to implement the agreement dated 31st December, 1966 or in the alternative the individual agreements with each workman whereby they were entitled to incentive payments as per the agreement dated 31st December, 1966' and that the employer should be directed 'to cease and desist from implementing against those workmen who are not members of Association of Engineering Workers the Settlement dated 9th January, 1971.' Subsequently after the decision of the Letters Patent Appeal by the Division Bench, a second complaint, being Complaint (ULP) No. 27 of 1976, came to be filed in respect of the second agreement of 5th August, 1971 making a similar grievance and asking for a similar relief in respect of the agreement of 5th August, 1971. The complaint shows that the main grievance was that the employer was not making any payment by way of incentive wages when the production exceeded the maximum of 1250 as provided in the agreement of 1966. The grievance appears to be that according to the employees, who claimed that the subsequent two agreements were not binding on them, they were entitled to incentive payment even in respect of the production which exceeded the maximum as provided in the 1966 agreement and the basis on which such claim was sought to be canvassed is disclosed in the complaint as follows :

'Though as per this 31st December, 1966 agreement the total incentive percentage earned if the final target is reached was fixed at a particular percentage of the wages earned by the workmen, it was expressly understood, agreed and acted upon that the respondent would pay to the workmen incentive beyond the final target figure at the same rate as it was payable till the final target was reached. This has in any event become a condition of service of the workmen employed in the said Kurla Plant and would constitute an agreement between the respondent and the individual workmen.'

In aid of that claim for incentive beyond the maximum production limit provided by the 1966 agreement, reference was made to the fact that such payments were made between August, 1967 and August, 1970 in respect of workmen of the Motor production Department and that when payment was made over 91%, it was treated as a part of the wages for all purposes such as provident fund contribution of the employee and the employer and gratuity was also paid to the workmen taking into account maximum payment made. In the second complaint, apart from the relief of declaration that the employer had engaged in an unfair labour practice in respect of his workmen, who were the members of the Engineering Mazdoor Sabha, an order was also sought that the employer 'be ordered and/or directed to implement the individual agreements with the workmen whereby in respect of production over the final target figure the workmen were paid incentive at the same rate as paid for production between the final target figure and the target figure.'

8. The stand taken by the employer before the Industrial Court was that it never forced any employees to accept payments under the agreement of 1971 and that it had given a choice to the workers to accept the agreement of 1971 if they so desired and that this was expressly made clear by notice dated 2nd November, 1973. The notice dated 2nd November, 1973 inter alia specified the incentive bonus payable to those of the workmen of the Motor Production Department who claimed that they were not bound by the Settlement dated 9th January, 1971 and it clarified that they were entitled to be paid incentive at the rate specified in the notice as per the agreement dated 31st December, 1966. The notice further stated that in calculating the incentive payment, 425 workmen would be allowed the benefit of the production turned out by the additional workmen also till the disposal of the appeal before the Supreme Court. It is clear that when this notice was issued, the appeal before the Supreme Court was pending. After pointing out that as the production had been generally above 1325 units, the members of the Association of Engineering Workers, which was a recognised union and then known as Premier Automobile Employees' Union, were entitled to be paid further incentive for production between 1325 and 450 engines at the rates specified in the notice, the notice clarified that on humanitarian and compassionate consideration and in order also not to discriminate between workmen and workmen, 'the company is willing to offer incentive payments payable under Item No. 11(B) in respect of production above 1325 units even to those workmen, who claimed not to be bound by the Settlement of 1971.' Discretion was left to such workers to accept or not to accept the same. The notice then stated :

'The company, however, desires to make it clear that in offering the aforesaid incentive payments, it does not in any manner, directly or indirectly, intend to implement and/or enforce the Settlement of 1971 on any of the workmen, who claim not to be bound by the aforesaid Settlement.'

The effect of this notice obviously was that employees, who claim not to be bound by the settlement of 1971, had the choice to claim payment in accordance with the agreement of 31st December, 1966 and not necessarily according to the agreement of 1971.

9. The Industrial Court recorded the evidence of two employees and decided both the complaints by a common order. Now the learned Judge of the Industrial Court held that he was not called upon to consider the question whether the agreement of 1966 survives or not, an approach which it is difficult to appreciate because the specific grievance of the workmen who filed the complaint was that the agreement of 31st December, 1966 was not being implemented and surely if the grievance that a certain agreement was not being implemented had to be enquired into, it will necessarily require the consideration of the question whether the agreement survives or not.

Apart from that, the employees contended that the agreement of 31st December, 1966 should be given effect to and in so far as these employees were concerned the employer was willing to give effect to the agreement. The question which was posed by the learned Judge of the Industrial Court was whether the company was trying to enforce the agreement of 1971 against these workers who were not the members of the Association of Engineering Workers and he made it expressly clear that 'I do not, therefore, propose to go into the question whether the right under the agreement of 1966 still survives.' Dealing with the question whether the employees were entitled to payment over 91% when the production figure had exceeded their target figure 1325, the Industrial Court held that the said payment was being made not as incentive payment but as an ex gratia payment and this was not in accordance with the term of the agreement of 1966. The Industrial Court had thus found as a fact that incentive payment beyond 91% could not be claimed in accordance with the agreement of 1966. Having recorded this finding after noticing the evidence of two workers who had unequivocally stated that they had not been pressurised for accepting the settlement of 1971, the learned Member of the Industrial Court held that this did not rule out the possibility of the other workers being pressurised, an issue which did not really fall for consideration before the Industrial Court. Holding that nobody on behalf of the company had entered into the witness-box to state that none from the management tried to force or persuade the other workers to accept the settlement of 1971, the learned Judge held that if the workers were forced to accept the settlement of 1971, there would be an automatic non-implementation of the agreement of 1966. Pointing out that it was not necessary that one must wait till the wrong is done, the Industrial Court held that if it was found that the company was trying to force the implementation of the agreement of 1971 with a consequent non-implementation of the 1966 agreement, the union was entitled to ask for necessary direction, so that the company can desist from adopting such course. The learned member of the Industrial Court did not half here but went on to observe that even though for the moment there was no actual pressure on any of the workers 'it is in the interest of peace in the industry that the company may be directed to desist from asking any of the workers or persuade them, who are not parties to the agreement of 1971 to accept the terms of the latter two of agreements. This will put an end to the long litigation and once for all allay the apprehension in their mind.' He, therefore, directed the company not to implement the terms of the agreements dated 9th January, 1971 and 5th August, 1971 against those workmen we are not members of the Association of Engineering Workers. It is this order of the Industrial Court which is now challenged by the petitioner-employer in this petition.

10. It is contended by the learned counsel for the petitioner that since there is finding by the Industrial Court that any unfair labour practice was engaged in or as being engaged in by the employer, there is no power or jurisdiction in the Industrial Court to make the impugned order. According to the learned counsel, before the Industrial Court could exercise its jurisdiction under S. 30 of the Act, it had to give a positive finding that the employer was guilty of non-implementation of the agreement of 1966. It is also pointed out that the finding recorded by the Industrial Court that there was an apprehension that the employer was likely to force the employees to accept the agreement of 1971 is contrary to the evidence of the two employees who were the only witnesses examined before the Industrial Court, in so far as the payment made to the employees for the period August, 1967 to August 1970 was concerned. The learned counsel contended that the payment was to be ex gratia and consequently both the complaints should have been dismissed or rejected by the Industrial Court.

11. The argument of the learned counsel for the employees was mainly directed at challenging the finding that the payment in respect of production above 1250 units even to those employees, who were paid in accordance with the 1966 agreement, was really not an ex gratia payment and while conceding very fairly that there was no express stipulation in the 1966 agreement which would entitle the employees to claims additional incentive payment in case the production exceeds 1250 units, it was vehemently argued by Mr. Damania that the agreement must be so construed as to imply a term or condition that the employees would be entitled to a payment over 91% in terms of the agreement of 1966 itself.

12. I have reproduced earlier the material operative parts of the order of the Industrial Court in which the Industrial Court has recorded a finding that the payment on which reliance was placed by the employees was an ex gratia payment and was not in accordance with the terms of the agreement of 1966. Now if we carefully read the provision of S. 30 of the Act, which regulates the power of the industrial Court, it will appear that before the power to make any operative order is exercised directing a person to cease and desist from an unfair labour practice, the Court has to find as a fact that the person named in the complaint has engaged in or is engaging in any unfair labour practice. The provisions of S. 30 will, therefore, show that unless the Court comes to the conclusion that the employer is indulging in an unfair labour practice, it will not have jurisdiction to direct the employer to cease or desist from the unfair labour practice complained of Sub-section (2) of S. 30 enables the Court to make an interim order including a direction to the person concerned to withdraw temporarily the practice complained of. It cannot be disputed that the Industrial Court has not come to a finding there is in fact any unfair labour practice of which the employer is guilty. It is, therefore, apparent that when the two complaints purport to make a grievance of an unfair labour practice, if the particular labour practice complained of has not been found against the employer, the power under S. 30 of the Act could not have been exercised by the Industrial Court. Section 32 of the Act provides for the power of the Court to decide all matters arising out of any application or complaint referred to it for the decision under any of the provision of the Act. Now, this provision is obviously intended to enable the Court to decide matters which may be incidental to the main complaint of an unfair labour practice alleged by the complainant before the Industrial Court. But if the Industrial Court finds that no unfair labour practice had been proved, it is not possible to find any power in the Court to make an order of an anticipatory nature based on any apprehension that in future any unfair labour practice is likely to be committed. Apart from that, in the instant case, such was never the complaint in the two complaints field before the Industrial Court.

13. Two employees were examined before the Industrial Court in support of the complaint filed and their evidence will show that they did not make any statement whatsoever about anybody from the side of the employer forcing them to accept payments, according to the agreement of 1971. The first witness was Shantaram Patil and though in cross-examination he had states that after 8th of September, 1975 the terms of the settlement of 1971 had been tried to be enforced against V. J. Deo, S. M. Bhosekar, K. S. Vadke, M. K. Gaikwad and others, Deo, who was himself examined as a witness, had to admit that nobody was forcing him to accept the settlement of 1971. He has positively stated in paragraph 7 of his evidence that the settlement of 5th August, 1971 was never enforced against him, that the terms of the agreements of 1971 January and August were never tried to be enforced against him after November, 1975 and even before that, the terms were not tried to be enforced against him. The three or four other persons named by Patil were not examined and it is, therefore, clear that there was no evidence before the Industrial Court on which it could base an apprehension that the agreements of 1971 would be enforced thus necessitating an order for injunction which even otherwise could not have been made by the Industrial Court on the finding earlier recorded by it.

14. Deo has admitted that in November, 1973, all the workers were offered two separate pay packets, one containing incentive payment under the settlement of 1966 and the other containing incentive payment under the agreement of 5th August, 1971 and he chose the packet containing the incentive payment under the agreement of 1966. It is obvious, therefore, that the order which is in the nature of an injunction preventing the employer from enforcing the agreement of 1971 and further preventing the employees to accept the agreement of 1971, was not justified by the evidence of the employee.

15. Now, it is the case of the employer thought that such of the employees, who did not feel bound by the agreement of 1971, were not forced to accept the payment under those agreements and they would be paid in accordance with the agreement of 1966. But it is difficult to appreciate the view of the learned Judge of the Industrial Court that the employer cannot even persuade its employees to accept the agreement of 1971. There does not seem to be any bar in any of the statutes or the laws dealing with industrial dispute, which prevents the employer from telling an employee that there are two agreements and he is likely to get more wages in accordance with one of them and he should, therefore, accept payment according to that agreement. Persuasion is not the same thing as forcing a person and there is nothing in law to prevent an employer from persuading an employee that he should accept a particular agreement and agree to be bound by it, though it will be for the employee to accept or reject such request of the employer. If the order of the Industrial Court is read properly, not only is the entire order wholly uncalled for, but it is contrary to the evidence and to a certain extent it is also without jurisdiction because the necessary jurisdictional fact, namely, proof of unfair labour practice did not exist.

16. This was really sufficient to dispose of the petition, but in fairness to an elaborate argument advanced by Mr. Damania, I must deal with his contention that the right to incentive wages beyond 91% must be considered as an implied terms of the agreement of 1966. This argument was obviously intended to challenge the finding given by the Industrial Court that the payment to some employees, who were governed by the 1966 agreement of incentive wages beyond 91% was an ex gratia payment.

17. Now, it has not been disputed that between August, 1967 and August, 1970 the employees, who claimed to be bound by the 1966 agreement, were in fact paid incentive payment in excess of 91%. These payments were made on 8 occasions. It appears that the second complaint specifically was intended to complain of the failure of the employer to make such payment after 1970. I have reproduced earlier the material portion of the complaint in which an express agreement was pleaded and even an individual agreement was pleaded. Both these cases have now been given up in this court because Mr. Damania has fairly stated that there is no express term in the agreement of 1966 and the 1966 agreement was obviously not an individual agreement. Having found that the case made in the complaint about an express agreement or an individual agreement entitling the employees to claim payment over 91% even under the 1966 agreement was difficult to canvass, an ingenious argument was resorted to by Mr. Damania that having regard to the fact that payment was made on 8 occasions, the payment in excess of 91% of incentive wages must be taken to be a term implied in the agreement of 1966. The argument appears to be based partly on the concept of an 'implied term of an agreement' and a Division Bench decision of this Court in Premier Automobiles Ltd., Bombay v. Engineering Mazdoor Sabha, Bombay [Miscellaneous Petition No. 1 of 1975 with Special Civil Application No. 9 of 1976], which is reported in 1976 Industrial Court Reporter at page 206. The question involved in that case was whether the provisions in the Certified Standing Orders could be considered as a part of the agreement relating to conditions of service for the purpose of item No. 9 in Schedule IV of the Act. The employer had resorted to a lay-off in terms of a settlement between the management and the recognised union. The Engineering Mazdoor Sabha, that is, the respondent in the present petition, which was not a party to the settlement, made a complaint under the Act to the Industrial Court that the employer was guilty of indulging in unfair labour practices because the Certified Standing Orders required that a lay-off should not be ordered by the employer without giving 7 days' notice and the lay-off could not be for a period exceeding 6 days in any month. The argument on behalf of the employer was that the word 'agreement' in item 9 in Schedule IV of the Act would take in only the express terms of an agreement and the Standing Orders could not be equated with an agreement which could only be the product of the voluntary and free consent of the two parties to the agreement. A Division Bench of this court gave a wide meaning to the word 'agreement' in Item 9 and held that the word 'agreement' could also include terms of service agreement, express or implied. Holding that the Standing Orders were expressly made a part and parcel of the service contract between the management and the employees, the Division Bench of Schedule IV cannot but include every clause of the Standing Orders. Having made these observations, the Division Bench further observed as follows.

In this context the following passage from page 12 of Sutton and Shannon on Contracts, Sixth Edition is illuminating and can conveniently be quoted : 'Nevertheless although such contracts are 'more like by-laws than a contract' there is no doubt that this set of rules contains the contract between the members.' In the same way, the worker enters into a contract of employment the terms of which are often derived not from any individual bargain between him and his employer, but (expressly or implication) from the collective agreement between his trade union and the employers. In this way, the collective machinery remedies an inequality of bargaining power between the parties to the individual contract of employment.'

Even if one were to construe the word 'agreement' by reference to the context the same conclusion would follow. Clause 9, of Schedule IV of the Act speaks of 'failure to' implement award, 'settlement or agreement'. It is well-settled that words take their colour from that which precedes and follows. Award after all is the compulsive adjudication of dispute by the authority constituted under the Industrial Disputes Act, and becomes binding on the employer and employees by force of the said statute and not due to any consent. As against this, free consent is the source of authority of the settlement. The word 'agreement' seems to have been used in a broad sense to include the terms of service agreements express or implied. Standing orders cannot be excluded from the word 'agreement' merely because part thereof has the imprint of the statutory compulsion as is the case with the 'award' with which the word is bracketed. Element of compulsion is present in some measure or the other both in the award and the agreement. Intention appears to ensure the maintenance of status quo with regard to whether its basis is the law or the contract, and discourage any attempt to disturb or impair it by treating it as unfair labour practice'. Relying on these observations Mr. Damania has contended that the word 'agreement' in Item 9 of Schedule IV of the Act will also take in an implied term of service and that in the instant case, in view of the fact that the payments on 8 occasions were made in excess of 91%, it must be taken to be established that there was an implied terms that employees would get additional incentive wages if production exceeded 1250 units even under the agreement of 1966.

18. It is not necessary for the purpose of this case to discuss the effect of the Division Bench decision referred to above which holds that the terms of the Standing Orders should be treated as implied terms of a service agreement as the Standing Orders were a part of the conditions of service of the employee, because even if we proceed on the footing that the word 'agreement' has been used in a wider sense in cl. 9, as held by the Division Bench, the question which will still have to be decided is whether the right to receive incentive wages in excess of 91% can really be considered as part of conditions of service and covered by the agreement of 1966. In the Division Bench case, there was no dispute that the clauses of the Standing Orders constituted conditions of service of the employees. The question in this petition is slightly different. The question is whether any term can be said to be implied in the agreement of 1966 and whether on the facts of the present case, there was an implied term in the agreement which enabled the employees to ask for incentive payment beyond 91%. We are dealing with an agreement which is a consensual document arrived at between the two parties to the document. We must, therefore, first find out the nature of the terms which can be implied in such an agreement and in that context, it is worthwhile referring to certain observations from Halsbury's Laws of England, Volume 8, 3rd Edition, in paragraphs 212 to 214. In paragraph 212, it is observed as follows :

'Implications of terms. In construing a contract, a term or condition not expressly stated may under certain circumstances, be implied by the Court, if it is clear from the nature of the transaction or from something actually found in the document that the contracting parties must have intended such a term or condition to be a part of the agreement between them. Such an implication must in all cases be founded on the presumed intention of the parties and upon reason, and will only be made when it is necessary in order to give the transaction that efficacy that both parties must have intended it to have, and to prevent such a failure of consideration as could not have been within the contemplation of the parties. In every case the question whether an implication ought or ought not to be made will depend on the particular facts; consequently it is neither possible nor desirable to lay down any hard and fast rules on the subject, and it must be remembered that the construction of one contract will afford but little guidance for the construction of another unless the faces and surrounding circumstances are practically identical'.

Further pointing out that if there was any reasonable doubt whether the parties did intend to enter into such a contract as is sought to be enforced, the learned authors have pointed out that the document should be looked at and all the surrounding circumstances considered and if the document is silent and there is no bad faith on the part of the alleged promisor, the Court ought to be extremely careful before it implies any term. It was then observed.

'It is not enough to say that it would be reasonable to make a particular implication, for a stipulation ought not to be imported into a written contract unless on considering the whole matter in a reasonable manner it is clear that the parties must have intended that there should be the suggested stipulation. If the contract is effective without the suggested term and is capable of being fulfilled as it stands, generally speaking an implication ought not to be made.'

These then are the tests for determining whether a term is implied in an agreement. A term cannot be held to be implied in an agreement merely because the Court thinks that it will be reasonable to imply such a term but what has to be found out when determining a question whether a particular term is implied or not is whether the parties intended that term should be a part of the contract. It is well-established that the making of a contract between the parties is now the exclusive jurisdiction only of an Industrial Tribunal in matters of industrial adjudication and unless such powers are specifically granted, no new contracts can be made between the parties by any Court, Thus when it is canvassed that a particular term is implied, one has to look to the intention of the parties and this intention has to be determined with reference to the point of time when the agreement is entered into because it is an agreement which is made at a particular time which is to be construed in order to find out whether at the time when the contract was made a particular term was contemplated by the parties and it was such that it must be taken as implied for a proper working of the contract. The Court will not imply a term unless it is compelled to do so in order to give effect to the intention of the parties which must be gathered from the written terms of the agreement reduced to writing.

19. Mr. Damania has referred to the observations made in Chitty on Contracts, 24th Edition, Volume I at paragraph 795 and the relevant observations read as follows;

'It is, however, clear that a term may be implied in any given case from the circumstances of the parties having invariably on former and similar occasions adopted a particular course of dealing .......'

Relying on these observations it was urged that on 8 occasions between August, 1967 and August, 1970, additional payments by way of incentive wages in excess of 91% have been made and the conduct of the employer would show that there was an implied term of the agreement of 1966.

20. This argument, in my view, is based on a misapprehension of the correct legal position. The provision for additional payment beyond 91% came for the first time in the agreement of 1971. The agreement of 1971. The agreement of 1966 itself did not provide for any such payment. Therefore, at the time of the 1966 agreement, there was no provision for any payment in excess of the maximum prescribed in respect of the production in question. If the question whether a term is implied or not is to be decided with reference to the agreement at the time when the agreement was entered into, the fact that subsequently payments were made would not make any such term as implied. Such, however, is not the position in the instant case because payment beyond 91% started being made only when it was provided for by the agreement of 1971.

20A. Even in Chitty on Contracts, the position is not differently stated from the passage reproduced above from Halsbury's Laws of England In paragraph 782, the learned author has pointed out that the implication of a term is a matter of law from the Court, and whether or not a term is implied is usually said to depend upon the intention of the parties and in paragraph 783, it is observed as follows :

'In many cases, however, one or both of the parties will genuinely seek to imply a term from the facts and circumstances surrounding a particular transaction. The Court will be prepared to imply a term if there arises from the language of the contract itself, and the circumstances under which it is entered into, an inference that the parties must have intended the stipulation in question. But the Court will not imply a term unless compelled to do so in order to give effect to the intention of the parties since 'the general presumption is that the parties have expressed every material term which they intended should govern their agreement, whether oral or in writing'

The learned author has also pointed out that the term must be implied if it is necessary in the business sense to give efficacy to the contract.

21. It is thus clear that a term can be implied in a contract by a Court only if it arises from the language of the contract and an inference is possible that the parties must have intended that term should be a part of the agreement. There is nothing which indicates that in 1966 when the agreement was entered into, it was within the contemplation of the parties that any payment in excess of the maximum stipulated under the agreement would be made to the employees. As a matter of fact this would have been left by the parties to be canvassed as an implied term. The parties must, therefore, be held to have intended to agree for only such payments as were expressly provided in the 1966 agreement.

22. It appears that some contention was advanced before the Division Bench which disposed of the Letters Patent Appeal, which arose out of the suit filed by the union challenging the second agreement of August, 1971. The contention raised there was noticed in the following words by the Division Bench :

'According to Mr. Damania, the basis of the suit is an implied condition of service arising from the fact that the company chose to make incentive payments even on production beyond the target figures fixed by the Settlement'.

This contention was rejected by the Division Bench firstly, on the ground that the question as to whether there was an implied term was not a pure question of law but was a mixed question of law and fact and secondly, on the ground that 'the only power civil Courts possess of reading implied terms in contracts is the power to ensure that the particular contract realises its manifest intention.' The Division Bench pointed out :

'It does not seem to be a correct principle of law that term as to payment of wages or increase in remuneration can be read into a contract of service as an implied term by reason of the conduct of the person after the contract of service has been entered into.'

The learned Judges observed :

'..... We find it difficult to appreciate how an implied term as to payment of incentive bonus over the fixed target figures can under general law or common law become an implied term of service for a particular individual'.

23. It is thus clear that the whole argument it at there is an implied right in the agreement to claim incentive payment beyond the maximum prescribed is wholly misconceived and must be rejected.

24. In the view which I have taken, the impugned order of the Industrial Court is liable to be quashed. The petition is thus allowed. Rule absolute. However, there will be no order as to costs of the petition.


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