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Dalmia Cement Company, Ltd. Vs. Industrial Tribunal and ors. - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtChennai High Court
Decided On
Judge
Reported in(1960)ILLJ628Mad
AppellantDalmia Cement Company, Ltd.
Respondentindustrial Tribunal and ors.
Cases ReferredFalk v. Williams
Excerpt:
- - 8. learned counsel for the petitioner submitted that the management had agreed to make these concessions because of the understanding both tacit as well as express that the workers would preserve industrial peace for a period of three years. on this part of the case, i consider the submission of the learned advocate-general for the respondents that the terms of clause (6) are clear and do not amount to a condition is well founded......an industrial peace will exist for a period of three years.2. the management implemented the terms of clauses (1) and (2) in relation to payment of bonus for 1955 and 1956 and of clauses (2) and (3) in relation to revision of basic salary of the employees. they also paid the bonus for 1957 in accordance with the terms of clauses (4) of the agreement. disputes, however, arose between the parties as regards the bonus payable for the year 1958.3. the claim of the workers was that on the terms of clauses (4) they were entitled to bonus at the rate of one-fourth of their basic earnings for the year. to this claim the management however raised two contentions: that by reason of certain conduct on the part of the employees, the agreement itself had ceased to have force or had lapsed and.....
Judgment:
ORDER

Rajagopala Ayyangar, J.

1. There was a dispute between the workers represented by the secretary, Dalmia Cement Workers' Union, Dalmiapuram, Tlruchirap-palli district, and the management of Dalmia Cement (Bharat, Ltd.), Dalmiapuram, in regard to bonus payable to the former for the year 1955. The claim of the workers was that on the basis of the profits earned by the concern they would be entitled to six months' total earnings as bonus for the year 1955, whereas the contention of the management was that they would be bound to and need pay only one-half of this amount. While this dispute was being attempted to be conciliated and settled, an agreement was arrived at on 6 July 1957 in the presence of the Minister for Labour, Government of Madras. As the entirety of the argument in this petition turned upon the proper construction and legal effect of the agreement, it would be convenient to set out its essential terms even at this stage. The preamble recited:-

Whereas the Hon'ble Sri R. Venkataraman (Minister for Labour) proposed that a long-term agreement may be entered Into between the management and the workers to ensure industrial peace, it is hereby agreed by the parties abovenamed as follows (management and the workers):

(1) That bonus for the accounting years 1955 and 1956 will be paid at the rate of one-third basic earnings of the employees (factory and mines) during the said years.

(2) That the management agrees to revise the basic salary earned by the employees by adding Rs. 4 (rupees four only) to their existing salaries with effect from 1 January 1957 so that the minimum basic wages will be raised from Rs. 26 to Rs. 30 per mensem, so as to cover the weekly offs that occur in a month.

(3) That this benefit, viz., the addition of Rs. 4 to basic salaries will be extended to employees who are drawing a basic salary of Rs. 200 and less per month.

(4) That it is further agreed that the bonus for the accounting years, 1957, 1958 and 1959 will be calculated and paid at the rate of one-fourth basic earnings of each employee in each of the years respectively. The above said bonus will be paid at the commencement of the subsequent accounting year.

(5) That this agreement shall be valid for three years till December 1959 in respect of basic wages and bonus.

(6) The parties trust that as a result of this agreement an industrial peace will exist for a period of three years.

2. The management implemented the terms of Clauses (1) and (2) in relation to payment of bonus for 1955 and 1956 and of Clauses (2) and (3) in relation to revision of basic salary of the employees. They also paid the bonus for 1957 in accordance with the terms of Clauses (4) of the agreement. Disputes, however, arose between the parties as regards the bonus payable for the year 1958.

3. The claim of the workers was that on the terms of Clauses (4) they were entitled to bonus at the rate of one-fourth of their basic earnings for the year. To this claim the management however raised two contentions: that by reason of certain conduct on the part of the employees, the agreement itself had ceased to have force or had lapsed and that consequently the workers could not claim bonus for the year 1958 under, the agreement and unless the same were payable on the basis of profits if any earned by them during the year applying what is now known as the Pull Bench formula, they need pay no bonus for that year. A subsidiary contention was also raised that on a proper construction of Clauses (4) the management were bound to pay bonus of three months' earnings only if they were bound to pay any bonus under the Pull Bench formula; in other words, the contention urged by them was that Clauses (4) merely determined the quantum of bonus payable provided some bonus was payable under the law and that the clause did not give any right to bonus if on the Pull Bench formula the workers would not be entitled to any bonus.

4. This might be a convenient stage at which to set out the basis of the claim of the management who are the petitioners in this petition in support of the argument that the agreement of 6 July 1957 has lapsed. Very shortly after the conclusion of the agreement in November 1957 the workers served a notice on the management to concede as many as 85 demands backed by a threat of strike in default of compliance. These demands were not met and this resulted in conduct on the part of the workers which led to the dismissal of a very large number of them. There were strikes and acts of insubordination on the part of the workers and it was stated that as a result of these acts and conduct there was a steep fall in production besides the management being put to the necessity of paying large sums by way of demurrage to the railway and these entailed considerable reduction in profits. The result was that the company earned during 1958 a profit of about Rs. 30 lakhs in the previous year. The case of the management was that the basic condition of the agreement of 6 July 1957 which Induced them to agree to a revision of the basic pay and the payment of bonus for the years 1957, 1958 and 1959 was that the workers had guaranteed Industrial peace for a period of three years and that as that condition was broken the agreement itself was no longer enforceable.

5. The workers, however, did not accede to this construction of the terms of the agreement and raised an industrial dispute and the State of Madras by their notification dated 19 June 1959 referred the following disputes for adjudication to the industrial tribunal, Madras:

(1) Is the Clause (4) of the agreement dated 6 July 1957 relating to payment of bonus not enforceable?

(2) If not, what bonus should be paid to the workers for the year 1958?

The industrial tribunal enquired into the matter and on a consideration of the terms of the agreement dated 6 July 1957 upheld the contention urged by the workers that Clauses (4) of the agreement continued to be operative, enforceable and that the management was bound to pay bonus as provided for in Clause (4). It is this construction of the agreement and legality of the award based on it that is challenged in this writ petition.

6. Mr. Gopalaratnam, learned Counsel for the petitioner (management), submitted two main contentions. The first was that the tribunal erred in law in holding that Clause (4) of the agreement was intended to operate unconditionally but that on the other hand the tribunal should hold that the payment of bonus in accordance with the terms of that clause was subject to the condition that the workers shall not resort to any act which would result in the disturbance of industrial peace for a period of three years. The second, which would arise only if the learned Counsel was right in his first submission, was that an application made on behalf of his client to the industrial tribunal for an adjournment for leading evidence was improperly declined and that consequently the award of the tribunal should be set aside and the matter remitted to the tribunal for adjudication after the petitioner was allowed reasonable opportunity to present his case.

7. The first point about Clause (4) being conditional was elaborated in the following manner. The only point of dispute between the management and the workers which was before the conciliation officer and the Government in or about July 1957 related to the question of bonus for 1955. The Government, however, as also the two parties to the dispute, namely, the management and the workers, were eager, and desirous of settling not merely the dispute pending then but also of avoiding disputes which might arise in future. The entire object of the agreement was to ensure what might be termed 'an industrial truce' for a period of three years. It was on that assurance and on that condition that the management agreed to grant two concessions:-

(1) an increase in basic wages of Rs. 4 under Clauses (2) and (3) regarding which there had been no disputes raised before that date, and

(2) bonus for 1957,1958 and 1959, irrespective of the profits, earned during the relevant period on the basis of three months' earnings, the bonus for these years not being the subject-matter of any dispute at that stage.

8. learned Counsel for the petitioner submitted that the management had agreed to make these concessions because of the understanding both tacit as well as express that the workers would preserve industrial peace for a period of three years. That this was the foundation of the agreement, the argument of the learned Counsel ran, would be clear from the terms of the preamble of the agreement which I have extracted where reference is made to the agreement having been brought about with a view to ensure industrial peace and particularly from Clause (6) of the agreement where 'the parties stress that as a result of the agreement industrial peace would exist for a period of three years. This argument has been considered by the tribunal but the conclusion which it reached was that the 'industrial peace' referred to in the agreement related only to claims for bonus and for basic wages and not to disputes in relation to other matters and that even otherwise Clause (6) merely expressed nothing more than a hope that 'industrial peace' would be ensured and that this would not amount to a condition on the non-maintenance of which the agreement would lapse.

9. The question ultimately for consideration la whether the construction of the terms of the agreement adopted by the tribunal is vitiated by an error apparent on the face of the record so as to be interfered with by this Court under Article 226 of the Constitution, in the first place, I find it somewhat difficult to hold that the agreement lapsed on the industrial peace being broken. Industrial peace may be broken either by labour or by the management and if as the learned Counsel for the petitioner contends this were treated as a condition subsequent, on its happening, there should be an automatic cessation of the agreement. No doubt decisions have laid down that a party might not take advantage of his own wrong and plead self-induced frustration as a defence to an action on a contract. This, however, would be too Insecure a foundation on which to hold that the substratum of this contract disappeared when any act which disrupted industrial peace took place. Industrial peace is a condition which could be brought about and maintained only by the conjoint harmonious and co-ordinated operation of several factors and forces and several agencies. To hold that such an absolute co-operation on the part of every one of the several agencies was an essential condition for the continuance of this contract and the stipulations expressly set out in it, is, In my opinion, not warranted by the terms of the agreement, as finally drafted.

10. Again a question might arise as to the degree to which 'peace' has been broken. It cannot be that the threat of a strike or a strike, or the threat of a lockout or a lookout, should, regardless of their consequences on the earnings of the company or generally its economic position, be regarded as putting an end to the contract. If the breach of industrial peace as a frustrating event were to be accepted, the tribunal or the court should, without evaluating the economic consequences of each act, have to characterize any act as a frustrating event. Nor is it possible to read the contract as meaning that if the economic consequence of the disruption to 'industrial peace' was adverse to the employer, the stipulations in the contract should cease to be effective. That would be not interpreting the agreement, taut rewriting it. I say this because

(1) the adverse economic consequence could be a matter of degree and it cannot be that the contract would cease to be in force without this being substantial; this itself introducing subjective factors;

(2) if parties had contemplated these matters, they would have Bet down in the agreement itself the degree of adverse consequence which would have mattered and that which would not have and also provided machinery for determining how the conduct of the parties has to be related to the adverse economic effect.

There is also one other reason why I consider the argument of the learned councel for the petitioner should be rejected. Conditions which operate in defeasance of a contract are either express or implicit. Where the parties have considered the matter and made specific provisions therefor, there is no room for any implied terms of the implication of a condition. In the case before me the parties had in their contemplation 'industrial peace' and had made express provision for it. The relevant clause regarding this is Clause (6) whose terms have already been set out. If the parties had been BO minded and had made a provision that in the event of an unjustified strike or an unjustified lookout the agreement would cease to be effective, the parties would have been relegatad to their rights under the law as distinguished from their rights under the agreement. But that is not what the parties chose to putdown in writing. On this part of the case, I consider the submission of the learned Advocate-General for the respondents that the terms of Clause (6) are clear and do not amount to a condition is well founded. The tribunal has stated that Clause (6) merely expressed a hope that Industrial peace would be maintained and I must say that on the words as they stand this is the only construction of which the clause is capable.

11. Mr. Gopalaratnam, however, submitted that that was not what the management intended, and that if they had in their minds the insertion of a clause which would act as a condition subsequent while the clause as drafted did not import that obligation, the parties should be held to be not ad idem so that no contract resulted. I am unable to uphold this extreme contention. The language of the agreement is one with which the the persons who entered into the contract on behalf of the management were familiar and the clause used no ambiguous words which could be understood in different senses by different parties so as to bring in the rule of law laid down in Falk v. Williams 1900 A.C. 176 . The words in the clause are clear and they amount to no more than an expression of a hope.

12. It is, however, possible that the management were bona fide under the impression that by agreeing to the concessions which they granted as a result of the mediation of the Minister for Labour they were securing freedom from agitation, go-slow, strikes and other forms of disturbance of industrial peace for a period of three years. Their hopes might have been belied, but on that ground they could have no relief because those hopes were not translated into the agreement. In view of the statement made about the loss sustained by the management due to the action of the workers during 1958 this case might serve as a warning to managements to be less trusting and use more specific terms in agreements of that nature and to insist upon clauses which would safeguard their rights and make It clear that any concessions made by them would be exigible only in the event of proper conduct on the part of the workers.

13. The second point that was urged was baaed upon the construction of Clause (4) of the agreement, the argument being that the amounts of bonus specified in Clause (4) would be payable only in the event of any bonus being payable under the Full Bench formula. Learned Advocate-General pointed out that Clause (8) of the affidavit filed in support of the petition contradicted such a construction. But this apart, I do not find it possible to construe Clause (4) in the manner suggested by the learned Counsel for the petitioner. This construction was not put forward before the tribunal, but I should not be understood as rejecting It merely for that reason.

14. As I said, the agreement is free from ambiguity and there could be no question of admission of evidence to explain or contradict any of its terms and in this view, I cannot see any prejudice being caused to the petitioner by the refusal of an adjournment which was applied for on behalf of the management before the tribunal.

15. It is common ground that if the answer of the tribunal to the first question referred to it regarding the continued operation of Clause (4) of the agreement was correct, the validity of its award could not be successfully impugned.

16. The result is that this writ petition fails and is dismissed. There will be no order as to costs.


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