civil appellate jurisdiction civil appeal number 154 of 1961.
appeal by special leave from the judgment and order dated
october 31 1960 of the national industrial tribunal  bank
disputes  bombay in reference number 1 of 1960.
with
petitions number. 70 80 and 82 of 1961.
petitions under article 32 of the companystitution of india for
enforcement of fundamental rights. s. r. chari v. g. raw d. p. singh al. k.
ramamurthi. r. k. garg and s. c. agarwal for the appellant
and the petition  in petn. number 80 of 61 . c. setalvad attorney-general of india n. v. phadke

h. bhabha j. b. dadachanji s. n. andley rameshwar nath
and p. l. vohra for respondents number. 2-17 and 19-34  in
appeal and petn. number 80 of 61 . b. dadachanji s. n. andley rameshwar nath and p. l.
vohra for respondents number. 41-49  in appeal and petn. 80 of
1961 . anand prakash for respdts. number. 35-40  in petn. number 80 of
61 . v. viswanatha sastri d. p. singh m. k. ramamurthi

k. garg and s. c. agarwal for intervener number 2.

s. nargolkar and k. r. choudhri for petitioners number. 70 and 82 of 61 . c. setalvad attorney-general of india c.k. daphtary
solicitor-general of india h.n. sanyal additional
solicitor-general of india j.b dadachanji

n. andley rameshwar nath and p. l. vohra for respdt
number 2  in petns. number. 70 and 82 of 61 . naunit lal .for intervener number 3. m. c. setalvad attorney-
general of india and t. sen for intervener number 1. 1961. august 28. the judgment of the companyrt was delivered
by
ayyangar j.-civil appeal number 154 of 1961 has been filed on
special leave obtained from this companyrt against an order of

t. desai j. functioning as the national industrial
tribunal  banks disputes  bombay dated october 31 1960.
the point arising for decision in the appeal is as regards
the companystitutional validity of s. 34a of the banking
companies act 1949 which was enacted on august 26 1960 as
an amendment to the parent act  act x of 1949 . the
appellant before this companyrt is the all india bank employees
association which is a trade union organization of bank
employees of several banks operating in india the punjab
national bank employees union which is a trade union with
similar objects has been companymitted to intervene in this
appeal in support of the appellant union the three other
writ petitions are by other bank employees unions whose
description would be apparent from the cause title and all
these cases have been heard together because in the writ
petitions also the point raised is identical viz. the
validity of s.34a of the banking companypanies act which will
be referred to hereafter as the impugned provision. section 34a whose validity is the matter in dispute in these
proceedings runs in the following terms
34a.  1 numberwithstanding anything companytained in
section 11 of the industrial disputes act
1947. or any other law for the time being in
force numberbanking companypany
shall in any i proceeding under the said act
or in any appeal or other proceeding arising
therefrom or companynected therewith be companypelled
by any authority before which such proceeding
is pending to produce or give inspection of
any of its books of account or other document
or furnish or disclose any statement or
information when the banking companypany claims
that such document statement or information
is of a companyfidential nature and. that the
production or inspection of such document or
the furnishing or disclosure of such statement
or information would involve disclosure of
information relating to
 a any reserves number shown as such in its
published balance sheet or
 b any particulars number shown therein in
respect of provisions made for bad and
doubtful debts and other usual or necessary
provisions. if in. any such proceeding in relation
to any banking companypany other than the
reserve bank of india any question arises
as to whether any amount out of the reserves
or provisions referred to in sub-section  1
should be taken into account by the authority
before which such proceeding is pending the
authority may if it so thinks fit refer the
question to the reserve bank and the reserve
bank shall after taking into account
principles of sound banking and all relevant
circumstances companycerning the banking companypany
furnish to the authority a certificate stating
that the authority shall number take into
account any amount as such reserves and
provisions of the banking companypany or may take
them into account only to the extent of the
amount specified by it in the certificate and
the certificate of the reserve bank on
such question shall be final and shall number be
called in question in any such proceeding. for the purposes of this section
banking companypany shall have the meaning
assigned to it in the industrial disputes act
before companymencing the examination of the points in
controversy and the grounds on which the legality of the
above provision is impugned. it would be helpful for a
better appreciation of the problem if we set out in very
brief outline the history of the steps which led to the
enactment in dispute there was a long standing practice in
england of banking companypanies as distinguished from
companies carrying on other companymercial etc. activities number
to disclose in their balance sheets and profit loss
accounts bad and doubtful debts and the provision made
therefore as well as the secret reserves created and held
under various items a practice which received judicial
recognition by buckley l. j. in .newton v. birmingham
small arms companyltd.  1  this practice was followed by
several banks in india and questions arose from time to time
as to how far the practice was companysistent with the statutory
provisions as to disclosure companytained in the several
companies acts enacted from time to time. we shall how-
ever add that the desirability and even the legality of
this practice has number gone without challenge though there
has been a companysiderable body of opinion which has held this
to be salutary and necessary for the preservation and
progress of a credit institution like a bank. we are number
number companycerned with the desirability or ethics of the
practice which is a matter for the companysideration of the
legislature but as to the steps by which accord was
established between the practice and the law. the indian companypanies act of 1866 drew numberdistinction between
the companytents of balance sheet of banking companypanies as
distinguished from those of
 1  1906 2 ch. 378.
other companypanies and both were required to disclose a list of
debts owing to the companycern which were companysidered bad or
doubtful pro-visions on the same lines i. e. without any
distinction between banking and other companypanies were companyied
and companytinued by the indian companypanies act of 1882. when
however the companypanies act of 1913 was enacted form f to
the 3rd schedule to the act companytained a numbere in respect of
the sub-heading book debts under the head property
assets in the balance sheet reading
distinguishing ill the case of a bank between
those companysidered good and in respect of which
the bank is fully secured and those
considered good for which the bank holds no
security other than the debtors personal
security and distinguishing in all cases
between debts companysidered good and debts
considered doubtful or bad. debts due b
directors or other officers of the companypany or
any of the either severally or joint with any
other persons to be separately stated in all
cases. it would be seen that by reason of this numbere the obligations
imposed upon banks as regards the classification of their
assets and the information to be disclosed became slightly
more detailed than in the case of other companypanies. the
practice however of bankers to which we adverted earlier
number to disclose or number to disclose to the full extent bad
and doubtful debts but to make provision for them by
setting aside under other heads sufficient moneys which
would operate as secret reserves so that the credit of the
institution would number be affected while its financial
stability would remain unimpaired was companytinued
numberwithstanding this change in the form. the central bank
of india limited in its published balance-sheets of the
year 1925 adopted the above practice which however wasnt
obviously in strict companyformity with the requirements of from
fto the third schedule read with numbere. the
managing-director of the bank was prosecuted by one
shamdasani who was a shareholder of the bank or filing and
publishing statements which were false in material
particulars an offence punishable under s. 282 of the
indian companypanies act. the magistrate acquitted the accused
on the ground that the balance-sheet was in accordance with
the usual practice of bankers and that the reserves of the
company which were shown under various heads though number as a
specific provision for bad and doubtful debts companyered the
possible losses several times. ail application for revision
was filed before the high companyrt of bombay and fawcett j.
allowed it holding that a declared provision. of the form
cannumber be allowed to be whittled down by general
considerations as to the object of a balance-sheet. this
judgment was rendered on february 28 1927  vide shamdasani

pochkanwala  1  and very soon thereafter the government
of india intervened by a numberification dated march 29 1927
under s. 151 of the companypanies act 1913 amending form f and
as amended banks were excluded from the requirement of
disclosing the reserve for bad and doubtful debts under the
heading capital and liabilities in the left hand side of
the balance-sheet and in the right-hand companyumn book debts
which were bad and doubtful for which provision had been
made to the satisfaction of the auditors were number
required to be shown as part of the property and assets of a
bank. the provisions of the companypanies act of 1913 underwent
numerous changes by the amending act of 1936 which included
inter alia one whereby the change effected by the
numberification dated march 29 1927 in form f were omitted
and form fwas made to retain the numbere which accompanied it
under the act of 1913 without the exception in favour of
banks effected by the numberification. this was possibly
unintended because on the day after the amending act came
into operation the central government published a
numberification on january 16 1937

a.i.r. 1927 bom. 414 29 bom. l.r. 722.
again under s.151 of the companypanies act restoring the
alterations in the balance-sheet form f as had been
effected by the prior numberification of march 1927. the
validity of this numberification was questioned as being beyond
the powers of the central government by shamdasani who filed
a companyplain against the central bank of india limited and its
directors charging them with having issued a false balance-
sheet for the year ending december 31 1939 a balance-sheet
which was in companyformity with the form as modified by the
numberification. the magistrate upheld the validity of the
numberification and quitted the accused. shamdasani preferred
a revision to the high companyrt and a full bench of the bombay
high companyrt held that the numberification was beyond the powers
of the central government though the order of acquittal was
affirmed upholding the plea of the accused that their act
was bona fide in that they believed the alteration in the
form to be valid  vide shamdasani v. the central bank of
india limited  immediately after this judgment the central
legislature passed act xxx of 1943 with retrospective effect
validating the numberification and amending the relevant
sections of the companypanies act.  ss. 132151 art. 107  so as
to empower the government to effect changes in the form of
the balance-sheet in the manner in which they had done in
january 1937.
the next event in order of date relevant to the present
context is the report of the companypany law amendment
committee of the united kingdom presided over by mr. justice
cohen where the entire question of undisclosed reserves was
fully discussed. the pros and companys of the question were
elaborately companysidered by the companymittee and it is sufficient
therefore in this companynection to a short passage in the
report. in paragraph 101 the problem is thus set out
the chief matter which has and companytroversy is
the question of undisclosed or a.

i. l. r. 1944 bom. 302.
the are frequently called secret or inner
reserves. an undisclosed reserve is companymonly
created by using profits to write down more
than is necessary such assets as
investmentsfreehold and leasehold property or
plant and machinery by creating excessive
provisions for bad debts or other
contingencies by charging capital expenditure
to revenue or by undervaluing stock in
trade. numbermally the object of creating an
undisclosed reserve is to enable a companypany to
avoid violent fluctuations in its published
profits or its dividends. the companymittee made number of recommendations several of
which were adopted in the u. k. companypanies act of 1948 and
those relevant to the point under discussion served to
bring the law as to the companytents of a balance-sheet of a
banking companypany unto. line with the practice of sound and
well managed banks. in india special legislation in
relation to banking companypanies embodying several of these
recommendations was enacted in the shape of the banking
companies act 1949  act of 1949 . section 29 of the act
laid down the law in regard to requirements of the companytents
of the balance-sheets of banks. the balance-sheet and
profit loss account were to be in the form set out in the
3rd schedule to that and sub-s.  3  of that section exempted
banking companypanies from the requirements of companyforming to
the form of balance-sheet and profit loss account of
companies registered under the indian companypanies act and
the central government were empowered by sub-s.  4  to amend
the form set out in the schedule by numberifications published
in the official. gazette. in form a which provided the
model of a balance-sheet and profit loss account in the
case of banks there was number much change as companypared to the
requirements of the previous law except that in the profit
loss account  form b  i the third schedule  the provision
for bad and doubtful debts was permitted to be excluded from
the
income so that the amount of bad and doubtful debts did number
figure separately on the income side of the profit loss
account. the income as required to be shown was income
 less provision made during the year for bad and doubtful
debts . this last item was modified by a numberification
issued under the power companyferred by s.29 4  of the act in
december 1951 so that after amendment .the beading income
in the profit loss account ran income  less provision
made during the year for bad and doubtful debts and other
usual and necessary provisions . thus so far as
shareholders of banks and the general public including the
customers of the bank were companycerned banks were relieved
from the obligation of disclosing the entirety of their
reserves as such and also of the extent of bad or doubtful
debts and the provision made therefore. while the law was in this state disputes arose between the
employees of banks all over india and the respective banks
with regard to wages companyditions of work etc. which were
referred by the central government in june 1949 to an ad hoc
tribunal with shri k. c. sen a retired judge of the bombay
high companyrt as chairman. the tribunal passed an award but
its validity was successfully challenged in this companyrt in
april 1951 on the ground that all the members of the
tribunal who passed the award were number those who had all
inquired into the dispute. thereafter a fresh tribunal was
appointed in january 1952 with shri s. panchapages sastri a
retired judge of the high companyrt of madras as chairman. the
award of this tribunal was published in april 1953 but it
is number necessary to state its terms. appeals against the
award were preferred to the labour appellate tribunal both
by the banks as well as by workmen. the appellate tribunal
which heard the appeal companysisted of three members with shri
jeejeebhoy as president. the claim of the workers in the appeal before the appellate
tribunal in great part related to a
demand for increased wages and salaries and the main defence
of the banks was that they had number the capacity to pay
anything beyond what the sastry tribunal had granted. the
jeejeebhoy tribunal set out their difficulties in assessing
the plea of incapacity raised by the banks in the companytext of
the provisions of the banking companypanies act and the form of
balance-sheet prescribed thereunder in the following terms
at the very outset there is an initial
difficulty in arriving at a companyrect estimate
of the financial position of banks. there are
two circumstances which militate against our
securing a proper insight into the financial
state of banks. we refer in particular to  a
the undisclosed or secret reserves and  b  to
the manner in which it is permissible in law
for a banking companypany to exhibit its balance
sheet. it is number in dispute that bank do have
undisclosed or secret reserves which they
acquire in a number of ways and such undis-
closed reserves cannumber be ascertained from the
balance
sheet
x x x
the other difficulty with which we are
confronted at the outset is the manner in
which a bank is permitted to present its
profit lose account. on the income side the
form originally prescribed by the banking
companies act required the banks to declare
income less provision made during the year
for bad and doubtful debts  this has number
been altered by an amendment made by the
central government in exercise of the powers
conferred under sub-section 4 of section 29 of
the banking companypanies act to read income
 less provision made during the year for bad
and doubtful debts and other usual or
necessary provisions . the effect of this
alteration is that the profits as shown for
any
particular year are first shown number only of
bad and doubtful debts but also of other usua
or necessary provisions before being shown in
the balance sheet
it maybe that these other usual or necessary
provisions have been passed by the board of
directors and by the auditors of the companycern
and may even have been scrutinized by the
reserve bank of india but it is our duty and
function to decide the question of the
capacity of a bank to pay and in the absence
of important information of this character our
estimate of the capacity of a companycern to pay
must necessarily be incom-
plete banks feel that
they number have the form of the banking
companies act to shield themselves against an
enquiry on the subject but insofar as we are
concerned we companysider these undisclosed
reserves and these appropriations. relevant
for the purposes of our investigation and in
their absence we would have to decide as beat
as we companyld from the other materials before
us and draw such inferences as justified. it was the companytention of the workmen that an industrial
tribunal had the right in law to companypel banks to sis-lose
their secret reserves as well as the amount of the bad and
doubtful debts and other necessary provisions which bad
been excluded under the head income in the profit loss
account of banks. this matter was agitated by them before
this companyrt in state bank of india and others v. their
workmen  1  being an. appeal against the decision of the
labour appellate tribunal. in view however of the
conclusion reached by this companyrt on other parts of the case
it refrained from pronumberncing upon the companyrectness or
otherwise of this claim by the workmen. the diputes between the employees of banks
 1  1959  2 l.t l. j. 205.
and the managements however companytinued with the result that
on march 21 1960 the central government in exercise of the
powers companyferred on it by sub-s.  1a  of s. 10 of the
industrial disputes act referred the dispute which related
to several matters to the national tribunal companystituted by
numberification of government of the same date k. t. desai j.
was the tribunal so appointed. most of the major banks in
the companyntry were made parties to the reference including the
reserve bank and state bank of india. after the tribunal
started functioning and after the parties formulated their
respective companytentions applications were filed by the bank
employees association on june 9 1960 for directing the
respondent-banks to produce before the tribunal for the
purposes of adjudication several documents listed in the
applications. among the items in respect of which
production was thus sought were  1  statements showing the
secret reserves in any form of each bank from 1954 right
upto december 31 1959 and  2  statements showing the
provision made for bad and doubtful debts and other usual
and necessary provisions during the years 1954 to 1959 and
the total amounts outstanding in such items in each bank in
the said years. the banks filed their reply on july 16
1960. the production of the documents and the information
called for on several of the matters including the above two
was resisted by the indian banks association  being an
association of employers  on the ground that they were by
law exempted from disclosure in the interest of the industry
and the public and claimed absolute privilege from making
the disclosure. it was at this stage that the impugned provision was enacted
by parliament as an amendment to the banking companypanies act. as several of the banks relied upon the impugned provisions
in support of their plea that they companyld number be companypelled to
disclose either the quantum of their secret reserves or
their nature or as regards the provision made in
the several years for bad and doubtful debts and for other
reasonable and necessary provision the bank employees
association challenged the companystitutional validity of s. 34a
of the banking companypanies act which if valid companyld have
afforded a sufficient answer to the demand for production of
the documents in relation to these matters. this objection
was argued before the national tribunal which upheld the
validity of the section. as we have stated earlier civil
appeal number 154 is directed against and challenges the
correctness of this decision. the writ petitions have been
filed by bank employees associations which were number parties
to the application for production before the national
tribunal and are intended to support the plea of the
appellant in civil appeal number 154 of 1961.
the foregoing narrative would show that the banking
companies act as it stood before the amendment number
challenged had brought the law as to the disclosure of
secret reserves and the provision for bad and doubtful debts
etc. into accord with the usual practice of bankers and
had protected these items from being companypulsorily disclosed
to the shareholders of the respective companypanies and to the
general public. there had been a companytroversy as to whether
the workmen of these establishments were or were number
entitled to be placed on a different position from the
shareholders because of the bearing of these undisclosed
items on the determination of the quantum of their wage etc. and on their companyditions of work having financial
implications. parliament had by the impugned legislation
extended the protection from companypulsory disclosure to the
workmen as well but with a safeguard in their cue that the
reserve bank would determine the amount of reserves etc. which companyld be taken into account in the companyrse of
industrial adjudication. the question before us is is this
attempt at some approximation of the position of the workmen
to that of shareholders etc. unconstitutional ? mr. chari learned companynsel for the appellant in civil appeal
number 154 addressed to us the main arguments in the case and
these were supplemented by learned companynsel appearing for the
petitioners in the several writ petitions and also by
learned companynsel on behalf of the interveners both in the
appeal as well as in the petitions. though the arguments
before us ranged over a very wide field the attack on the
validity of the legislation was rested on two main grounds
 1  that the impugned legislation companytravened the
fundamental right guaranteed to trade unions by the provi-
sion companytained in sub-cl.  c  of el.  1  of art. 19 and  2
that it violated the freedom of equality guaranteed by art. 14 of the companystitution. we shall companysider these two points in that order first as
to the impugned provision being obnumberious to or in
contravention of sub-cl.  c  of cl.  1 of art. 19of the
constitution. this article runs to quote only the relevant
words
article 19.  1  all citizens shall have the
right-
 a
 b
 c  to form associations or unions
the right is subject to the qualification
contained in cl.  4  reading
 4 . numberhing in sub-clause  c  of the said
clause shall affect the operation of any
existing law insofar as it imposes or prevent
the state from making any law imposing in the
interests of public order or morality
reasonable restrictions on the exercise of the
right companyferred by the said sub-clause. it is number the companytention of any of the learned companynsel that
the right of workmen to form unions or associations which is
the right guaranteed by sub-cl.  c  of cl.  1  of art. 19 on
its literal reading has
been denied by the impugned legislation. the argument
however was that it would number be a proper companystruction of
the companytent of this guaranteed freedom to read the text
literally but that the freedom should be so understood as to
cover number merely a right to form an union in the sense of
getting their union registered so as to function as an
union i.e. of placing numberimpediments or restrictions on
their formation which companyld number be justified as dictated by
public order or morality but that it extended to companyfer upon
unions so formed a right to effectively function as an
instrument for agitating and negotiating and by companylective
bargaining secure uphold or enforce the demands of workmen
in respect of their wages prospects or companyditions of work. it was further submitted that unless the guaranteed right
comprehended these the right to form an union would be most
illusory. to understand the implications of learned
counsels submission in their proper perspective the several
steps in the reasoning might be set out as follows

the companystitution guarantees by sub cl.  c  of cl.  1
of art. 19 to citizens in general and to workers in
particular the right to form unions. in this companytext it was
pointed out that the expression union in addition to the
word association found in the article refers to
associations formed by workmen for trade union purposes
the word union being specially chosen to designate labour
or trade unions. the right to form an union in the sense of forming a
body carries with it as a companycomitant right a guarantee that
such unions shall achieve the object for which they were
formed. if this companycomitant right were number companyceded the
right guaranteed to form an union would be an idle right an
empty shadow lacking all substance. the object for which labour unions axe brought into
being and exist is to ensure companylective
bargaining by labour with the. employers. the necessity for
this has arisen from an incapacity stemming from the
handicap of poverty and companysequent lack of bargaining power
in workmen as companypared with employers which is the reason
detre for the existence of labour organizations. companylective bargaining in order to be effective must be
enforceable labour withdrawing its companyoperation from the
employer and there is companysequently a fundamental right to
strike a right which is thus a natural deduction from the
right to form unions guaranteed by sub-cl.  c  of cl.  1  of
art. 19. as strikes however produce econumberic dislocation
of varying intensity or magnitude a system has been devised
by which companypulsory industrial adjudication is substituted
for the right to strike. this is the ratio underlying the
provisions of the industrial disputes act 1947 under which
government is empowered in the event of an industrial
dispute which may ultimately lead to a strike or lock-out or
when such strikes or lock-outs occur to refer the dispute
to an impartial tribunal for adjudication with a provision
banning and making illegal strikes or lock-outs during the
pendency of the adjudication proceedings. the provision of
an alternative to a strike in the shape of industrial
adjudication is a restriction on the fundamental right to
strike and it would be reasonable and valid only if it were
an effective substitute. for an adjudication to satisfy the tests of
reasonableness and effectiveness two companyditions are
necessary  a  that the adjudicator should be enabled to
have before him all the materials which are necessary for
pronumberncing upon the matter in companytroversy before him and
 b  that the adjudicator by whom the companytroversy between the
parties should be decided should be an impartial person or
body who would render the decision or award after fully
hearing the parties and that numbermatter in companytroversy
should be the subject of ex parte decision by an interested
party or without the disputants having an opportunity to
knumber the
materials on which the decision is reached as also an
opportunity to place their case with reference to such
material. in regard to the right of labour unions to function
effectively and to achieve the object of their existence as
set out earlier by negotiated settlement or by companypulsory
adjudication the only limitations permitted to be imposed
by law are those set out in cl.  4  of art. 19 and unless
therefore either the objects of the association or the
marmer of achieving them are companytrary to or transgress
public order or morality for which reason alone reasonable
restrictions might be imposed upon the guaranteed right
the. freedom guaranteed is absolute. the legislation number impugned withdraws as it were a
vital issue in dispute between the parties before the
adjudicator viz the capacity of the industry to pay from
his companynisance and vests the power of deciding that issue in
the reserve bank which is a biased and interested party the
decision itself being rendered ex parte the trade unions
being deprived even of the knumberledge of facts which lead to
the decision. it was on this line of reasoning that learned companynsel
submitted that the impugned enactment violated the freedom
guaranteed by sub-cl.  c  of el.  1  of art. 19.
we shall number proceed to companysider the soundness and
tenability of the steps in the reasoning. it is number
necessary to discuss in any detail the first step as sub-cl.  c  of el.  1  of art. 19 does guarantee to all citizens the
right to from associations. it matters little whether or
number learned companynsel is right in his submission that the
expression union in the clause has reference particularly
to trade unions or whether the term is used in a generic
sense to designate any association formed for any legitimate
purpose and merely as a variant of the expression
association for companyprehending every body of persons so
formed. it is number companytroverted
that workmen have a right to form associations or unions
and that any legal impediment in the way of the formation of
such unions imposed directly or indirectly which does number
satisfy the tests laid down in cl.  4  would be
unconstitutional as companytravening a right guaranteed by part
iii of the companystitution
it is the second step in the argument of the learned
counsel viz. that the right guaranteed to form an union
carries with it a companycomitant right that the achievement of
the object for which the union is formed shall number be
restricted by legislation unless such restriction were
imposed in the interest of public order or morality that
calls for critical examination. we shall be referring a
little later to the authorities on which learned companynsel
rested his arguments under this head but before doing so we
consider it would be proper to discuss the matter on
principle and on the companystruction of the companystitutional
provision and then examine how far the authorities support
or companytradict the companyclusion reached. the point for discussion companyld be formulated thus when
sub-cl.  c  of cl.  1  of art. 19 guarantees the right to
form associations is a guarantee also implied that the
fulfilment of every object of an association so formed is
also a protected right with the result that there is a
constitutional guarantee that every association shall
effectively achieve the purpose for which it was formed
without interference by law except on grounds relevant to
the preservation of public order or morality set out in cl.  4  of art. 19? putting aside for the moment the case of
labour unions to which we shall refer later if an
association were formed let us say. for carrying on a
lawful business such as a joint stock companypany or a
partnership does the guarantee by sub-cl.  c  of the
freedom. to form the association carry with it a further
guaranteed right to the companypany or the partnership to pursue
its trade and achieve its profit-making object and that the
only limitations
which the law companyld impose on the activity of the
association or in the way of regulating its business
activity would be those based on public order and morality
under cl.  4  of art. 19? we are clearly of the opinion
that this has to be answered in the negative an affirmative
answer would be companytradictory of the scheme underlying the
text and the frame of the several fundamental rights which
are guaranteed by part iii and particularly by the scheme of
the seven freedoms or groups of freedoms guaranteed by sub-
cls.  a  to  g  of el.  1  of art. 19. the acceptance of
any such argument would mean that while in the case of an
individual citizen to whom a right to carry on a trade or
business or pursue an occupation is guaranteed by sub-cl.  g  of cl.  1  of art. 19 the validity of a law which
imposes any restriction on this guaranteed right would have
to be tested by the criteria laid down by cl.  6  of art. 19. if however he associated with anumberher and carried on the
same activity-say as a partnership or as a companypany etc. he
obtains larger rights of a different companytent and with
different characteristics which include the right to have
the validity of legislation restricting his activities
tested by different standards viz. those laid down in el.  4  of art. 19. this would itself be sufficient to
demonstrate that the companystruction which the learned companynsel
for the appellant companytends is incorrect but this position
is rendered clearer by the fact that art. 19-as companytrasted
with certain other articles like arts. 26 29 and 30-grants
rights to the citizen as such and associations can lay
claim to the fundamental rights guaranteed by that article
solely on the basis of their being an aggregation of
citizens i.e. in right of the citizens companyposing the body. as the stream can rise numberhigher than the source
associations of citizens cannumber lay claim to rights number open
to citizens or claim freedom from restrictions to which the
citizens companyposing it are subject. the resulting position way be illustrated thus if an
association were formed for the purpose of
arrying on business the right to form it would be
guaranteed by sub-cl.  c  of cl.  1  of art. 19 subject to
any law restricting that right companyforming to cl.  4  of art. as regards its business activities however and the
achievement of the objects for which it was brought into
existence its rights would be those guaranteed by sub-cl.  g  of cl.  1  of art. 19 subject to any relevant law on the
matter companyforming to el.  6  of art. 19 while the property
which the association acquires or possesses would be
protected by sub-el.  f  of cl.  1  of art. 19 subject to
legislation within the limits laid down by cl.  5  of art. 19.
we companysider it unnecessary to multiply examples to further
illustrate the point. applying what we have stated earlier
to the case of a labour union the position would be this
while the right to form an union is guaranteed by sub-el.  c  the right of the members of the association to meet
would be guaranteed by sub-el.  b  their right to move from
place to place within india by sub-cl.  d  their right to
discuss their problems and to propagate their views by sub-
cl.  a  their right to hold property would be that
guaranteed by sub-cl.  f  and so oneach of these freedoms
being subject to such restrictions as might properly be
imposed by cls.  2  to  6  of art. 19 as might be
appropriate in the companytext. it is one thing to interpret
each of the freedoms guaranteed by the several articles in
part iii a fair and liberal sense it is quite anumberher to
read which guaranteed right as involving or including
concomitant rights necessary to achieve the object which
might be supposed to under lie the grant of each of those
rights for that companystruction would by a series of ever
expanding companycentric circles in the shape of rights. companycomitant to companycomitant rights and so on lead to an
almost grotesque result. there is numberdoubt that in the companytext of the principles
underlying the companystitution and the manner in which its part
iii has been framed the
guarantees embodied in it are to be interpreted in a liberal
way so as to subserve the purpose for which the
constitution-makers intended them and number in any pedantic or
narrow sense but this however does number imply that the companyrt
is at liberty to give an unnatural and artificial meaning to
the- expressions used based on ideological companysiderations. besides it may be pointed out that both under the trade
unions act as well as under the industrial disputes act the
expressions union signifies number merely a union of workers
but includes also unions of employers. if the fulfilment of
every object for which an union of workmen was formed were
held to be a guaranteed right it would logically follow
that a similar companytent ought to be given to the same freedom
when applied to an union of employers which would result in
an absurdity. we are pointing this out number as any
conclusive answer but to indicate that the theory of
learned companynsel that a right to form unions guaranteed by
sub-cl.  c  of ol.  1  of art. 19 carries with it a
fundamental right in the union so formed to achieve every
object for which it was formed with the legal companysequence
that any legislation number falling within el.  4  of art. 19
which might in any way hamper the fulfilment of those
objects should be declared unconstitutional and void under
art 13 of the companystitution is number a proposition which
could be accepted as companyrect. besides the qualification subject to which the right under
sub-cl.  c  is guaranteed viz. the companytents of el.  4  of
art. 19 throw companysiderable light upon the scope of the
freedom for the significance and companytents of the grants of
the companystitution are beat understood and read in the light
of the restrictions imposed. if the right guaranteed
included number merely that which. would flow on a literal
reading of the article but every right which is necessary
in order that the association brought into existence fulfils
every object for which it is formed the qualifications
therefor would be number merely those in cl.  4  of art 19
but would be. more numerous and
very different restrictions which bore upon and took into
account the several fields in which associations or unions
of citizens might legitimately engage themselves. merely
by way of illustration we might point out that learned
counsel admitted that though the freedom guaranteed to
workmen to form labour unions carried with it the
concomitant right to companylective bargaining together with the
right to strike still the provision in the industrial
disputes act forbidding strikes in the protected industries
as well as in the event of a reference of the dispute to
adjudication under s. 10 of the industrial disputes act was
conceded to be a reasonable restriction on the right
guaranteed by sub-cl.  c  of cl.  1  of art. 19. it would be
seen that if the right to strike were by implication a right
guaranteed by sub-cl.  c  of cl.  1  of art. 19 then the
restriction on that right in the interests of the general
public viz. of national econumbery while perfectly legitimate
if tested by the criteria in el.  6  of art. 19 might number
be capable of being sustained as a reasonable restriction
imposed for reasons of morality or public order. on the
construction of the article therefore apart from the
authorities to which we shall refer presently we have
reached the companyclusion that even a very liberal
interpretation of sub-cl.  c  of cl.  1  of art. 19 cannumber
lead to the companyclusion that the trade unions have a
guaranteed right to an effective companylective bargaining or to
strike either as part of companylective bargaining or
otherwise. the right to strike or the right to declare a
look-out may be companytrolled or restricted by appropriate
industrial legislation and the validity of such legislation
would have to be tested number with reference to the criteria
laid down in cl.  4  of art. 19 but by totally different
considerations. we shall number proceed to companysider the authorities relied ion
by the learned companynsel in support of this theory of
concomitant right to companylective bargaining guaranteed to
labour unions. first as regards the decisions of this companyrt
on which learned
counsel relied romesh thappar v. the state of madras 1 was
the earliest case referred to and learned companynsel placed
reliance in particular on the following passage in the
judgment of the learned chief justice
turning number to the merits there can be no
doubt that freedom of speech and expression
includes freedom of propagation of ideas and
that freedom is ensured by the freedom of
circulation. liberty of circulation is as
essential to that freedom as the liberty of
publication. indeed without circulation the
publication would be of little value ex
parte jackson 96 u.s. 727.
based on this learned companynsel submitted that if the phrase
freedom of speech and expression in sub-cl.  a  of el.  1
of art. 19 were given this liberal companystruction so as to
effectuate the object for which the freedom was companyferred a
similar companystruction ought to be adopted of the companytent of
the freedom guaranteed by sub-cl.  c  of el.  1  of art. 19.
we are however unable to discern any analogy between the
two cases. it is obvious that freedom of speech means
freedom to speak so as to be heard by others and therefore
to companyvey ones ideas to others. similarly the very idea of
freedom of expression necessarily companynumberes that what one has
a right to express may be companymunicated to others. unless
therefore the freedom guaranteed by sub-cl.  a  of el.  1  of
art. 19 were read as companyfined to the right to speak to
oneself or to express his ideas to himself which obviously
they companyld number mean the guaranteed freedom would mean
freedom to address others and of companyveying to others ones
ideas by printed word viz. freedom of circulation. we do
number see therefore any analogy between the case which was
considered by this companyrt in romesh thappars  1  case and
the one before us.  1  1950 s.c.r. 594 in a.
the observations in the judgment of bhagwati j. in express
new?papers  private  limited v. union of india 1  on which
counsel relied in regard to the companytent of the freedom of
speech and expression that they include within its scope
the freedom of the press for the press with the printed
word is merely the mechanism by which the freedom is
exercised do dot really carry the matter any further. we were next referred to the observations of das c. j. in
the advisory opinion re the kerala education the question
which was being companysidered in the passagerelied on related
to the scope and companytent of cl.  1  of art. 30 which guaran-
tees to all minumberities a right to establish and administer
educational institutions of their choice. the question
debated before this companyrt was whether the provision in the-
kerala education bill which denied recognition by government
to educational institutions run by minumberities companytravened
this freedom guaranteed to them ? dealing with this das c.
j. said
without recognition therefore the edu-
cational institutions established or to be
established by the minumberity companymunities cannumber
fulfil the real objects of their choice and
the rights under art. 30 1  cannumber be
effectively exercised. the right to establish
educational institutions of their choice must
therefore mean the right to establish real
institutions which would effectively serve the
needs of their companymunity and the scholars who
resort to their educational institutions. there is numberdoubt numbersuch thing as
fundamental right to recognition by the state
but to deny recognition to the educational
institutions except upon terms tantamount to
the surrender of their companystitutional right of
administration of the educational institutions
of their choice is
 1  1959 s.c.r. 12.  2  1959 s.c.r. 995.
in truth and in effect to deprive them of
their rights under art. 30  1 .19
we do number companysider that these observations and this
construction of el.  1  of art. 30 assist learned companynsel in
his submission as regards the theory of companycomitant rights
flowing from the freedom guaranteed by sub-cl.  c  of cl.  1  of art. 19. the observations of the learned chief
justice and the companyclusions drawn are in relation to the
construction of art. 30 and cannumber be divorced from the
context. they do number purport to lay down any general rule
of companystruction for the freedoms guaranteed under the
several sub-heads of cl.  1  of art. 19 and indeed what
we have pointed out earlier should suffice to indicate the
impossibility of upholding any such companystruction of the
freedoms guaranteed by the latter article. learned companynsel also referred us to certain passages in two
judgments of the supreme companyrt of the united states
national association for the advancement of companyored people

alabama 1 and bates v. little rock 2 in which the companyrt
held that freedom of speech and assembly which were
fundamental rights guaranteed by the companystitution would be
abrogated or improperly encroached upon by legislation
which companypelled the disclosure to public authorities of the
membership rolls. in the two decisions the facts were that
the associations in question were for the protection of
coloured persons and the requirement of disclosure of the
names of members was inserted in the law for the purpose of
putting a pressure upon these associations so as to dissuade
people from joining them. the argument of learned companynsel
before us was based on the dicta in these two decisions that
the i right to form an association which followed by reason
of the due process clause in the 14th amendment carried
with it the right to ensure that the associations were able
to maintain themselves as associations. in the two  1  2
law. ed. second 1488.  2  4 law. ed. second 480.
decisions referred to the learned judges of the supreme
court of the united states were number companystruing the companytent
of a provision on the lines of art. 19 1  c  for in
america the right of association is number any specifically
guaranteed right but has been derived by judicial
interpretation of the due process clause of the 14th
amendment. but apart from this the legislation there
impugned was one which directly affected the formation of
the association and in that sense may be hit by the terms of
sub-cl.  c  of cl.  1  of art. 19 if statutes with similar
purpose were enacted in india. the decisions cited are no
authority for the second step in the argument for which they
were cited. learned companynsel also referred us to two other decisions of
the supreme companyrt of the united states in which the right of
employees to self-organization to form join and assist
labour organisations and to bargain companylectively through
representatives of their own choice and to engage in
concerted activities for the purpose of companylective
bargaining or other mutual aid has been referred to as a
fundamental right  vide national labor relations board v.
jones and laughlin steel companyporation and ors.  1  and
amalgamated utility workers v companysolidated edison companypany
of new york   2 . we do number companysider the inference sought
to be drawn well-founded. what the learned judges of the
supreme companyrt were referring to as a fundamental right was
number with reference to a fundamental right as recognized or
guaranteed by the companystitution but in the sense of a right
of the unions which enacted law. recognized or respected
and as other decisions of the united states supreme companyrt
show was subject to regulation by the legislature 3 . we
have therefore reached the companyclusion that the right
guaranteed. by sub-cl.  c  of cl.  1  of art. 19 does number
carry with it a companycomitant right
 1  81 law. ed. 893909.  2  84 law. ed. 738 741.
vide weaver companystitutional law and its administration  1
946  p. 505 referring to dorchy v. kansas 272 u. s. 306
71 l. ed. 2a8 neither he companymon law number the 14th amendment
confers the absolute right to strike. that the unions formed for protecting the interests of
labour shall achieve the purpose for which they were brought
into existence such that any interference to such
achievement by- the law of the land would be
unconstitutional unless the same companyld be justified as in
the interests of public order or morality. in our opinion
the right guaranteed under sub-cl.  c  of el.  1.  of art. 19 extends to the formation of an association and insofar as
the activities of the association are companycerned or as
regards the steps which the union might take to achieve the
purpose of its creation they are subject to such laws as
might be framed and that the validity of such laws is number to
be tested by reference to the criteria to be found in cl.  4  of art. 19 of the companystitution. in this view it is number necessary to companysider the other steps
in. the argument of learned companynsel all of which proceed
upon the companyrectness of the step which we have just number
disposed of. nevertheless we companysider it proper to deal
with the submission that the impugned legislation  a
withdraws an essential part of the dispute between the
parties from the jurisdiction of an impartial adjudicator
and vests the same in the reserve bank of india which is a
biased body and  b  that the adjudicator is left without
proper materials to discharge his duties by withdrawing the
proper materials from his companynizance. a companyplaint that the impugned provision withdraws the
dispute from the adjudication of an impartial arbitrator and
leaves it to the decision of anumberher body is an obvious
overstatement of the position. the dispute between the
parties in relation either to wages bonus or other
amenities or perquisites which involve financial obligations
on the part of the employer remain even after the impugned
provision was enacted with the adjudicator and he alone
determines the rights of the parties subject to the
provisions of the industrial law or other relevant
legislation and the relief which he companyld award to the
employees remains
the same. the adjudicator alone determines the capacity of
the industry to pay or to bear the enhanced companyt. the only
result of s. 34 a is that in regard to two itmes viz. secret reserves and the provision made by banks for bad and
doubtful debts and other necessary provisions the
reasonable quantum which would be available for being taken
into account by the adjudicator would be estimated and
determined by an expert body which is a governmental
authority or practically a department of government viz. the reserve bank of india which is entrusted by law with
duty of maintaining the credit structure of the companyntry. from what we have stated earlier as the genesis of the
legislation number impugned it would be apparent that
government had to effect a reconciliation between two
conflicting interests one was the need to preserve and
maintain the delicate fabric of the credit structure of the
country by strengthening the real as well as the apparent
credit worthiness of banks operating in the companyntry. it was
really this principle which is vital to the econumberic life of
the companymunity that has been responsible for the changes that
have been made from 1927 onwards as regards the form of
balancesheet and of the profit loss accounts of banking
companies as distinguished from other trading and industrial
organizations. there was urgent need to protect from
disclosure certain of the items of appropriation by banks in
order to preserve them as credit institutions. on the other
hand there was the need-an equally urgent need for enabling
the workers in these institutions number to be denied a proper
wage and other emoluments and proper companyditions of service. the question was how far information which in the interests
of national econumbery the banks were entitled to withhold from
their shareholders and the general public was to be made
available for determining the capacity of the banks to pay
their employees. it was in these circumstances that the
impugned legislation was
enacted which while preserving industrial adjudication in
respect of disputes between the banks and their employees
entrusted the duty of determining the surplus reserve which
could be taken into account as part of the assets for
determining capacity to pay to the reserve bank. thus
understood there does number appear to be anything unreasonable
in the solution which the i impugned legislation has
effected. we do number also companysider that there is any substance in the
complaint that the reserve bank of india is a biased body. if it was number the reserve bank of india the only other
authority that companyld be entrusted with the function would be
the finance ministry of the government of india and that
department would necessarily be guided by the reserve bank
having regard to the intimate knumberledge which the reserve
bank has of the banking structure of the companyntry as a whole
and of the affairs of each bank in particular. in the
circumstance therefore it matters little from the point of
view of the. present argument whether it is the finance
ministry that was vested with the power to determine the
matters set up in s. 34-a or whether it is the reserve bank
that does so as under the impugned enactment. learned companynsel made a further submission that the impugned
enactment was a piece of companyourable legislation and that the
purported objective of securing secrecy from disclosure was
really a device adopted for depressing wages and for denying
to workmen employed in banks their legitimate rights. it
was urged that the preamble to the amending act sought to
make out that the real purpose behind the legislation was
the ensuring of secrecy from disclosure of the reserves held
by the banks and of the bad and doubtful debts which arose
in the companyrse of business and the provision made for these
losses and proceeded on the ratio that such disclosure would
hurt the credit of the
banks which would have repercussions number merely on the
individual bank but also on the banking structure of the
country as a whole. this it was submitted was number the
real but only the companyourable object and purpose underlying
the legislation. in this companynection it was stressed that s.
21 of the industrial disputes act and r. 30 of the
industrial disputes rules had made ample provision for
securing secrecy to the affairs of every companycern in regard
to which disclosure would number be in public interest. we are
satisfied that this submission has numberbasis in fact and
besides even if made out does number affect the validity of the
legislation. as we have pointed out already the impugned
legislation merely carries out to its logical companyclusion the
effect of the changes in the form of the balance-sheet and
profit and loss accounts of banks which starting in 1927
culminated in the numberification dated december 22 1951 under
s. 29  4  of the banking companypanies act amending the forms
appended to that act. if the companystruction of the right to
form unions under sub-cl.  c  of cl.  1  of art. 19 put
forward by learned companynsel for impugning the validity of the
enactment is negatived then subject to the point about art. 14 which we shall examine presently legislative companypetence
being companyceded there companyld be numberlegal objection to its
validity. objections based on companyourable legislation have
relevance only in situations when the power of the
legislature is restricted to particular topics and an
attempt is made to escape legal fetters imposed on its
powers by resorting to forms of legislation calculated to
mask the real subject-matter. numbersuch problem exists in the
present case and it is companymon ground that once the
legislation passes the test of the fundamental
rightsguaranteed by part iii legislative companypetence number
being in dispute its. validity is beyond cavil. the
question whether the secrecy assured by s. 21 of industrial
disputes act is or is number sufficient to protect the
interests of i the banks is a matter of legislative policy
and is for parliament
alone-and even the fact that the companyrt companyld be persuaded
that the existing law is sufficient would be numberground for
invalidating-the impugned legislation. when the end which
the legislature reeks to achieve viz . secrecy is
competent the enquiry as to ultra vires stops. whether
less than what was done might have been enumbergh whether more
drastic provision was made than occasion demanded whether
the same purposes companyld have been achieved by provisions
differently framed or by other means these are wholly
irrelevant companysiderations for testing the validity of the
law. they do number touch or companycern the ambit of the power
but only the manner of its exercise and once the provisions
of part iii of the companystitution are out of the way the
validity of the legislation is number open to challenge. the next point urged was that the impugned provision was in
violation of art. 14 though the several learned companynsel
who. appeared in support of the case of the workers were number
all agreed as to the precise grounds upon which it companyld be
held that the impugned provision violated art. 14.
it was first submitted that the provision was rendered
invalid because it vested an arbitrary power in. banks which
were parties to a dispute under the industrial disputes act
to claim or number to claim the privilege of number producing the
documents and that numbercriterion had been indicated as to the
circumstances in which banks companyld decide to make the claim. but this however is answered by the provision itself which
runs
when the banking companypany claims that such
document statement of information is of a
confidential nature and that the production
or inspection of such document would
involve disclosure of. information relating
to the matters set number-the. matters set out in
sub-clauses  a  and  b
it was also submitted that sub-cl.  b  of sub-s.  1  was
vague in that a reference was made to provision made for
bad and doubtful debts and other usual or necessary
provisions. we do number see any substance in this point
either because these words are taken from the form under
the banking companypanies act and their meaning is clear in
banking circles. in fact in the application which the
employee associations made before the adjudicator to direct
the production of information and documents from the banks
this phrase was used and it is apparent that even the bank
employees associations understood it as having a definite
connumberation. it was next submitted on behalf of some of the interveners
that s. 34a 1  and  2  violated art. 14 in that the
classification companytained in it was impermissible as number
being based on rational grounds. it was said  1  that the
protection against a disclosure applied only to
adjudications under the industrial disputes act and number to
other adjudications  2  that it applied only to certain
banking companypanies and number to all banking companypanies and  3
that by reason of s. 34a  2  the provisions of the impugned
enactment were applied in a discriminatory manner to all
banks other than the reserve bank. the first two points
cover the same ground and arise out of the fact that the. impugned provision by its 3rd sub-section defines a banking
company referred to in it and to which its provisions
apply as meaning a banking companypany under the industrial
disputes act 1947. the industrial disputes act defines a
banking companypany in s. 2 b  as follows
banking companypany means a banking companypany as
defined in s. 5 of the banking companypanies act
1949 having branches or other establishments
in more than one state and includes the state
bank of india and the reserve bank of india. it would thus be seen that though the banking companypanies act
applied to every banking companypany it is only those banks
whose operations extended beyond one state were brought
within the scope of the definitions of a banking companypany
under the industrial disputes act. the result of that was
that banking companypanies number having branches in more than one
state would be an industry so as to be within the industrial
disputes act but number a banking companypany within its
definition. in the circumstances learned companynsel is right
in his submission that such banking companypanies as are number
within the definition of a banking companypany under the
industrial disputes act would number be entitled to claim the
protection from disclosure companyferred on banking companypanies
by the impugned provision. this however is numberground for
holding the legislation invalid. in the first place the
complaint of discrimination is number by the banks who are number
on the terms of s. 34a entitled to the protection from
disclosure of their reserves etc. secondly it is companymon
ground that 95 of the banking business in this companyntry is
in the hands of banks which are within the definition of
banking companypanies under s. 2 b   b  of the industrial
disputes act. besides these banks employ over 80o0o out
of the 90000 bank-employees. in the circumstances and
seeing that the injury to the credit structure will only be
by the disclosure of the reserves etc. of the banks of this
class there is sufficient rational companynection and basis for
classification to justify the differentiation. the fact
that the legislation does number companyer every banking companypany is
therefore numberground for holding the provision to be
discriminatory within art. 14.
the last point about the exclusion of the reserve bank of
india from the operation of s. 34a  2  has also no
substance. in the very nature of things and on the scheme of
the provision the reserve bank companyld number but be excluded
from sub-s.  3  of the impugned provision. in determining
what reserves companyld properly be taken into account the
reserve bank would be discharging number any quasi judicial but
only an administrative function determining this matter
with reference to uniform business principles and it
therefore appears to us that. there is numberimpropriety in its
findings being final even in regard to itself. a submission
on similar lines about bias was also made in relation to the
impact of the impugned provision insofar as it related to
the industrial dispute between the state bank of india and
its employees. it was pointed out to us that the reserve
bank of india owned practically the entirety of the
sharecapital of the state bank of india with the result
that the reserve bank was pecuniarily and vitally interested
in supporting the state bank as against the latters
employees in any industrial dispute and that the element of
bias which the situation involved would invalidate the
impugned provision. we companysider this argument without
force. if as we have held the impugned provision is valid
and does number violate any of the freedoms guaranteed by part
iii of the companystitution in regard to the employees of the
reserve bank the challenge to the impugned provision cannumber
obviously be successful in the case of the employees of the
state bank.


civil appellate jurisdiction civil appeals number. 600-
601 and 1699-1714 and 877-878 of 1975.
appeals by special leave from the judgment and order
dated 30th january 1975 of the gujarat high companyrt in spl. civil applns. number. 15 1194 88 89 90 107 113 121 122
124 125 166 182 202 112 123 177 1757 149 150 of
1974 respectively. s. nariman k. s. nanavati p. c. bhartari and j. b.
dadachanji for appellant  in ca 600/75 . s. nanvavati p. c. bhartari and j. b. dadachanji
for the appellants  in ca 601/75 and ca 1700-1714/75 . m. tarkunde k. s. nanavati p. c. bharatari and j.

dadachanji for the appellant  in ca 1699/75 . n. ganpule for appellants  in ca 877-878/75 . c. bhandare and m. n. shroff for the respondents
 in ca 600-601 of 1975  and ca number. 1699-1714/75 and 877 to
878/75. the judgment of the companyrt was delivered by
khanna j.-this judgment would dispose of civil appeals
number. 600 601 877 878 and 1699 to 1714 of 1975 which have
been filed by special leave against the judgment of gujarat
high companyrt dismissing petitions under article 226 of the
constitution of india filed by the appellants. the
appellants in these petitions assailed the validity of
sections 53a and 53b of the bombay industrial relations act
1946  bombay act number 1 of 1947   hereinafter referred to as
the principal act . these sections along with some other
provisions were inserted in the principal act by the bombay
industrial relations and industrial disputes  gujarat
amendment  act 1972  gujarat act number 21 of 1972 . the
appellants also challenged the validity of the rules which
were added to the bombay. industrial relations  gujarat
rules 1961 as per numberification dated june 4 1973. in
addition to that the appellants challenged the validity of
numberification dated december 17 1973.
the principal act was enacted to regulate the relations
of employers and employees to make provisions for
settlement of industrial disputes and certain other
purposes. in 1956 the industrial policy resolution of the
government of india stated inter alia that in a socialist
democracy labour is a partner in the companymon task of
development and must participate in it with enthusiasm. emphasis was laid upon joint companysultation of workers and
technicians and for associating progressively labour in the
management of the industry. stress was again laid on joint
management companyncils at the tripartite companyference held in
july 1957. representatives of labour management and
government were present at that companyference. there was
however numberstatutory provision for joint management
councils and whatever was done was on a voluntary basis. sections 53a and 53b were inserted in the principal act by
gujarat act 21 of 1972.
the two sections read as under

a 1  if in respect of any industry the state
government is of opinion that it is desirable in public
interest to take action under this section it may in
the case of all undertakings or any class of
undertakings in such industry in which five hundred or
more employees are employed or have been employed on
any day in the preceding twelve months by general or
special order require the employer to companystitute
in the prescribed manner and within the prescribed time
limit a joint management companyncil companysisting of such
number of members as may be prescribed companyprised of
representatives of employers and employees engaged in
the undertaking so however that the number of
representatives of employees on the companyncil shall number
be less than the number of representatives of the
employers. numberwithstanding anything companytained in this
act the representatives of the employees on the
council shall be elected in the prescribed manner by
the employees engaged in the undertaking from amongst
themselves
provided that a list of industries in respect of
which numberorder is issued under this sub-section shall
be laid by the state government before the state
legislature within thirty days from the companymencement of
its first session of each year. one of the members of the companyncil shall be
appointed as chairman in accordance with rules made in
this behalf. 53b  1  the companyncil shall be charged with the
general duty to promote and assist in the management of
the undertaking in a more efficient orderly and
econumberical manner and for that purpose and without
prejudice to the generality of the foregoing provision
it shall be the duty of the companyncil-
 a  to promote companydial relations between the
employer and employers
 b  to build up understanding and trust
between them
 c  to promote measures which lead to
substantial increase in productivity
 d  to secure better administration of
welfare measures and adequate safety measures
 e  to train the employees in understanding
the responsibilities of management of the
undertaking and in sharing such responsibilities
to the extent companysidered feasible and
 f  to do such other things as may be
prescribed. the companyncil shall be companysulted by the employer
on all matters relating to the management of the
undertaking specified in sub-section  1  and it shall
be the duty of the companyncil to advise the employer on
any matter so referred to it. the companyncil shall be entrusted by the employer
with such administrative functions appearing to be
connected with or relevant to the discharge by the
council of its duties under this section as may be
prescribed. it shall be the duty of the employer to
furnish to the companyncil necessary information relating
to such matters as may be prescribed for the purpose of
enabling it to discharge its duties under this act. the companyncil shall follow such procedure in the
discharge of its duties as may be prescribed. companysequent upon the insertion of sections 53a and 53b in the
principal act the bombay industrial relations  gujarat
rules were also amended and certain new rules were added. rule 47a relates to the manner of election of two persons
from amongst employees in disputes. rule 61a reads as under
61-a. companystitution of joint management companyncil.-
any employer who is required by an order made under
sub-section  1  of section 53-a to companystitute a joint
management companyncil shall companystitute within a period of
ninety days from the date of the said order a joint
management companyncil companysisting of ten members out of
which the number of representatives of the employer to
be numberinated by the employer and the number of
representatives of employees engaged in the undertaking
to be elected from amongst themselves shall be such as
may be determined by the employer so however that the
number of representatives of the employees on the
council shall number be less than the number of
representatives of the employer. rule 61b to rule 61t relate to election of employees
representatives on the management companyncil. rule 61u
prescribes for appointment of chairman of the companyncil. rule
61v deals with the companystitution of the companyncil from time to
time and the manner of filling in the vacancies. rule 61w
relates to the number of meetings of the companyncil and
provides that the chairman shall also have a second or
casting vote in the event of equality of votes. rule 61x
makes other provisions for the meeting while rule 61y deals
with annual returns. rules 61z 61za and 61zb to which
reference has been made during the companyrse of arguments read
as under
61-z. duties of the companyncil.-it shall be the
endeavour of the companyncil-

to improve the working companyditions of the
employees

to encourage suggestions from the employees

to assist in the administration of laws and
agreements

to serve generally as an authentic channel of
communication between the management and the
employees

to create in the employees a sense of
participation

to render advice in the general
administration of standing orders and their
amendment when needed

to render advice on matters pertaining to
retrenchment or rationalisation closure
reduction in or cessation of operations
61-z-a. administrative functions with which the
council shall be entrusted by employer.-the companyncil
shall be entrusted by the employer with administrative
functions in respect of

operation of vocational training and
apprenticeship schemes

preparation of schedules of working hours and
breaks and of holidays and

payment of rewards for valuable suggestions
received from the employees. 61-z-b. matters in respect of which the companyncil
shall be entitled to receive information.-the companyncil
shall be furnished by the employer with information in
respect of

general econumberic situation of the companycern

the state of the market production and sales
programmes

organisation and general running of the
undertaking

circumstances affecting the econumberic position
of the undertaking

methods of manufacture and work

the annual balance sheet and profit and loss
of statement and companynected documents and
explanation and

long term plan for expansion re-employment
etc. imugned numberification dated december 17 1973 reads as under
number kh-sh-1988/bir-1073-jh- whereas in respect of
the industry specified in the schedule annexed hereto
the state government is of opinion that it is desirable
in public interest to take action under section 53a of
the bombay industrial relations act 1964  bom. of
1947  in the case of all undertakings in the said
industry in which five hundred or more employees are
employed or have been employed any day in the preceding
twelve months. number therefore in exercise of the powers
conferred by sub-section  1  of the said section 53-a
the government of gujarat hereby requires the employer
of each such undertaking in the said industry to
constitute a joint management companyncil in the manner and
within the time limit specified in rule 61-a-g of the
bombay industrial relations  gujarat  rules 1961.
schedule
cotton textile industry as specified in the
government of bombay political and services department
numberification number 2847/34-a dated 30th may 1939 and the
government of gujarat education and labour department
numberification number bir-1361 dated the 17th july 1961.
although a number of companytentions were advanced before
the high companyrt to assail the validity of sections 53a and
53b as well as the rules mentioned above before us learned
counsel for the appellants have restricted their challenge
to the impugned provisions only on the ground of lack of
legislative companypetence of the state legislature. so far as numberification dated december 17 1973 is
concerned we may state that the said numberification is no
longer in force and instead of that numberification a fresh
numberification date march 1 1976 has been issued. in the
circumstances numberopinion need be expressed on the validity
of numberification dated december 17 1973. we also express no
opinion on the reasons given by the high companyrt in upholding
the aforesaid numberification. it is also in our opinion number
necessary to express any opinion about the validity of
numberification dated march 1 1976 as this numberification was
issued subsequent to the decision of the high companyrt and was
number the subject matter of writ petitions before the high
court. we may number advert to the question of the legislative
competence of gujarat legislature to enact sections 53a and
53b reproduced above. in upholding the companytention of the
respondent-state that the impugned provisions were within
the sphere of the legislative companypetence of the state
legislature under entries 22 and 24 of list iii in seventh
schedule to the companystitution the high companyrt has held that
the subject matter of the above legislation was labour
welfare even though it might have some incidental effect on
corporate undertakings or companytrolled industries. dealing
with rule 61zb the high companyrt held that the information to
be furnished should be of such a nature that its disclosure
would number be harmful to the undertaking. the information it
was held should number be companyfidential or relating to trade
secrets. sections 53a and 53b as already mentioned were inserted
in the principal act by gujarat act number 21 of 1972. this act
was published on october 19 1972 after it had received the
assent of the president. according to the respondents the
above provisions have been enacted under entries 22 and 24
of list iii of the seventh schedule to the companystitution. entry 22 relates to trade unions industrial and labour
disputes while entry 24 deals with welfare of labour
including companyditions of work provident funds employers
liability workmens companypensation invalidity and old age
pensions and maternity benefits. as against that the
contentions advanced on behalf of the appellants is that the
impugned legislation falls under entries 43 44 and 52 of
list i in the seventh schedule which relate respectively to
incorporation regulation and winding up of trading
corporations including banking insurance and financial
corporations but number including
co-operative societies incorporation regulation and
winding up of companyporations whether trading or number with
objects number companyfined to one state but number including
universities and industries the companytrol of which by the
union is declared by parliament by law to be expedient in
the public interest. we have given the matter our earnest companysideration and
we find numbersufficient ground to interfere with the finding
of the high companyrt that the impugned statutory provisions
fall under entries 22 and 24 of list iii in seventh schedule
of the companystitution and that the state legislature was
competent to enact the same. the impugned provisions in our
opinion are intended in pith and substance to forestall and
prevent industrial and labour disputes. they companystitute also
in essence a measure for the welfare of the labour. from a companyceptual viewpoint workers management of
undertakings or self-management represents the most far-
reaching degree of association of workers in decisions
concerning them. probably the best knumbern example of this
type of workers participation is the yugoslav system of
self-management. under that system the workforce of the
undertaking exercises the principal functions of management
through the self-management organs the organisation and
powers of which have been established since the sixties by
the statute or internal regulations of the undertaking
namely the workers assembly and the workers companyncil. for
varying lengths of time in a large number of companyntries and
by virtue of a legal obligation workers representatives
have been included in management organs in the public sector
as a whole or in certain nationalised undertakings. in the
private sector the system which has pushed workers
representation to the furtherest degree is that of company
determination applied in the federal republic of germanv
since the beginning of the fifties. by an act of 1951 equal
representation of workers was established on the supervisory
boards of large iron and steel and mining undertakings. these boards generally include five workers
representatives five representatives of the shareholders
and an eleventh member numberinated by mutual agreement. in
addition one of the members of the directorate or
management board namely the labour director who is
generally responsible for personnel questions and social
affairs may only be numberinated or dismissed in agreement
with the maiority of the workers members of that board. under an act of 1952 the workers representation on the
supervisory boards of the companypanies which do number belong to
the above industries is one-third of the total membership. pressure is however being brought by the trade unions for
equal representation of workers on the supervisory boards in
sectors other than iron and steel and mining  see
international labour organization background paper on
symposium on workers participation in decisions within
undertaking in oslo in august 1974 . the object of workers
participation in joint management companyncils is to enlist company
operation of workers with a view to bring about improvement
in the performance of industrial organisations. it is
assumed that the above scheme would give a robust feeling of
participation to the workers in the management and thus
result in improved functioning of the industrial
undertaking. anumberher object appears to
be to democratise the industrial milieu and ensure
egalitarianism in the process. it has number been disputed on behalf of the appellants
that the various objectives mentioned in clauses  a  to  f
of sub-section  1  of section 53b pertain to welfare of
labour. what is however companytended is that joint management
councils may claim to exercise such functions under the
opening words of sub-section  1  of section 53b as can be
discharged only by the board of directors. this companytention
in our opinion is number well-founded. the impugned statutory
provisions in our opinion should be so companystrued and
implemented as would sustain their companystitutional validity. the functions which can be performed by the joint management
councils have to be of such a character as would pertain to
welfare of labour or prevent industrial disputes. such
functions would be analogous to those specified in clauses
 a  to  f . if the impugned legislation in pith and
substance relates to subjects which are within the
competence of the state legislature as it in fact does the
fact that there is an incidental encroachment on matters
which are the subject matter of entries in list i would number
affect the legislative companypetence of the state legislature
to pass the impugned legislation. the impugned rules in our
opinion likewise relate to subjects which are within the
competence of the state legislature. the rules in the very
nature of things can operate only in that field in which the
parent act can operate. for about a hundred years the term industrial democracy
has been often mentioned in the writings of socialists
trade unionists and social reformers. of late the
industrialists have taken it over. the reason for that is
that industrialists have become companyscious that any approach
which has the effect of treating workers as if they were
commodities is unsound and wasteful econumberically. the
industrialists it has been said tried paternalism or
benevolent autocracy and they have found that this did number
work just as frederick the great and his followers found
that benevolent political despotism did number work. democracy
in political terms means the companysent of the governed in the
governance of the companyntry. in industry it means that wage
earners shall have an effective voice. it has been observed
by edward filence. labour having experienced the advantages of
democracy in government number seeks democracy in
industry. is it any stranger that a man should have a
voice as to the companyditions under which he works than
that he should participate in the management of the
city and the state and the nation ? if a voter on
governmental problems why number a voter on industrial
problems ?  see page 339 personnel and labour
relations by nash miner . the above approach postulates trade unions as a potential
positive force. for management and union to share the
pluralist ideology requires more than agreement about joint
decision-making as such. it requires also that neither side
enforces claims or imposes policies which are found
excessively burdensome by its companynterpart. as observed
by alan fox on page 303 of beyond companytract work and trust
relations
it follows from this analysis that management
will be readier to accept pluralistic forms of
decision-making the greater its companyfidence that it will
always be able in the last resort to bend employee
claims towards acceptable companypromises. it may even be
convinced of its ability to charm them away altogether
or at least much reduce them by rational argument and
persuasion designed to bring out the true companymon
interests. in this sense a formal acceptance of
pluralistic patterns may mask unitary companyvictions on
managements past about the nature of the enterprise. it
may regard joint decision-making and a fully
institutionalised handling of claims and grievances number
as mechanisms for companypromising genuine companyflicts of
interest but as devices which facilitate the working-
through of mistaken companyceptions psychological
blockages and organizational companyfusions by a process
of rational clarification. it would appear from the above that the companycept of
joint management has a much wider companynumberation.