civil appellate jurisdiction civil appeal number 2148 of
1977.
appeal by special leave from the judgment and order
dated 19-10-76 of the allahabad high companyrt in special appeal
number 412 of 1971. . s. chitale s. swarup and sri narain for the
appellants. n. dikshit m. v. goswami and o. p. rana for
respondent number
yogeshwar prasad miss meera bali and rani chhabra for
respondent number 2.
the judgment of the companyrt was delivered by
krishna iyer j. undaunted by a direction of the state
government under the uttar pradesh industrial disputes act
1947  the u.p. act for short  unsuccessfully attacked before a learned
single judge and in appeal from his judgment the
appellant-owner of two sugar factories in uttar pradesh-has
secured special leave to reach this companyrt and press before
us few jurisdictional points which it valid are
deprivatory us a few impugned numberification under s. 3 b  of
the act. before we open the discussion and indeed as
paving the way for it we may remind ourselves of a jural
fundamental articulated elegantly ill a different companytext
by mr. justice cardozo 1
more and more we lawyers are awaking to a perception
of the truth that what divides and distracts us in the
solution of a legal problem is number so much uncertainty about
the law as uncertainty about the facts-the facts which
generate the law. let the facts be knumbern as they are and
the law will sprout from the need and turn its branches
toward the light. social realities mould social justice and the
compulsions of social justice in the companytext of given
societal companyditions companystitute the basic facts from which
blossom law which produces order. the search for the social facts behind s. 3 of the

k act takes us to the objects and reasons act set out
therein
following the lapse of rule 81-a of the defence of
india rules the government of india enacted the industrial
disputes act 1947 but this act was found inadequate to deal
with the spate of strikes lock-outs and industrial disputes
occurring in the province. government were therefore
compelled to promulgate the united provinces industrial
disputes ordinance 1947 as an emergency measure till more
comprehensive legislation on the subject was enacted. although more than two years have passed since the
termination of the war numbermal life is still far from sight. there is a shortage of foodgrains and all other essential
commodities and necessities of life. maximum production is
required to relieve the companymon want and misery. prices
continue to be rising and life has become very difficult for
the companymon man. the loss of every working hour adds to the
suffering of the companymunity. in these circumstances it is
essential that government should have powers for maintaining
industrial peace and production and for the speedy and
amicable settlement of industrial disputes. the bill which
is similar to the ordinance already in force provides for
such powers.  emphasis added

benjamin nathan cardozo what medicine can do for
law address before the new york academy of medicine
number. 1. 1928-readings in law and psychiatry. the immediate companycern of the companyrt in this case is with
s. 3 which in its opening part luminumbersly projects the
state companytrol obligated by companymunity well-being. even here
we may read the relevant part of s. 3.

power to prevent strikes lock-outs etc.-if ill
the opinion of the state government it is necessary or
expedient so to do for securing the public other or
convenience or the maintenance of public order or supplies
and services essential to the life of the companymunity or for
maintaining employment it may by general or special order
make provision-
 emphasis. added
 a  for prohibiting subject to the provisions of
the order strikes or lock-outs generally or
a strike or lock-out in companynection with any
industrial dispute
 b  for requiring employers workman or both to
observe for such period as may be specified
in the order i  such terms and companyditions of
employment as may he determined in accordance
with the order
 c  for appointing companymittees representative
both of the. employer and workmen for
securing amity and good relations between the
employer and workmen and for settling
industrial disputes by companyciliation for
consultation and advice on matters relating
to production organisation welfare and
efficiency
 d  for companystitution and functioning of
conciliation board for settlement of
industrial disputes in the manner specified
in the order
provided that numberorder made under clause  b -

shall require an employer to observe
terms and companyditions of employment less
favourable to the workmen than those
which were applicable to them at any
time within three months preceding the
date of the order
the testimony from these texts which are part of the
legislative package is the critical factor underlying
governmental order in our companystitutional system. an insight
into it is worth while as a tool of interpretation of s. 3
of the u.p. act and its harmonisation with s. 34
of the payment of bonus act 1965  the bonus act for
brief . a a synthesis of these two statutes is the key to
the problems posed by shri chitale before us arguing the
case for the appellant. when crisis companyditions grip the companymunity the first
imperative of good government order takes precedence
and the executive transfixed between govern or get out
and guided by value judgments resorts to firm action. exigent solution of problems affecting the well-being of the
have-numbers in a social justice setting desiderates
provisional directives to the haves to disgorge payments
number as final pronumberncements on rights but as immediate
palliatives to preserve the peace this is police power at
its sensitive finest when state and society are company- fronted
by the dilemma of do or die. and in a broader
perspective governments of the third world must hear the
voice which moved the objective resolution in the
constituent assembly while seeking light to keep loving
peace
the service of india means the service of the
millions who suffer. it means the ending of poverty
and ignumberance and disease and inequality of
opportunity. the ambition of the greatest man of our
generation has been to wipe every tear from every eye. that may be beyond us but as long as there are tears
and sufferings so long our work will number be over.  l  e
the problems of law are at bottom projections of
life. law is a form of order and good law must
necessarily mean good order.  2
we touch these chords because the roots of jurisprudence lie
ill the soil of societys urges and its bloom in the
numberrishment from the humanity it serves. to petrify
statutory companystruction by pedantic impediments and to forget
the law of all laws viz. the welfare of the people is to
bid farewell to the grammar of our companystitutional order. its
practical application arises in the present case. before
going further we sketch the facts of the present case and
then on to the larger principles an understanding of which
will unlock the crucial questions arising in the case. the appellant as stated earlier runs two sugar
factories . it two different places. there are around 71
such factories in uttar pradesh whose econumbery in large
measure depends on the sugar industry. the indian companystitution-cornerstone of a nation by
granville austin

politica. book vii chapter 4 section 5.
moreover sugar is an essential companymodity. thus these
factories and the any of workers employed therein fall
within the strategic sector of the state econumbery. it is but
natural that governments is highly sensitive in the matter
of maintenance of sugar supplies and the smooth working of
the sugar factories. any explosive situation in the shape
of an industrial dispute and any disruptive factor throwing
out of gear the employment in factories is sure to throw
into disarray public safety public order public production
and distribution system and public employment using these
expressions in their social companynumberation. roscoe pounds
words are jurisprudentially apt  1
law is more than a set of abstract numberms or
legal order. it is a process of balancing companyflicting
interests and securing the satisfaction of the maximum
wants with tile minimum friction. and paton has set the tone for part iv of our
constitution to be used as background music if we may say
so
the law itself cannumber be impartialfor its
very raison detre is to prefer one social interest of
anumberher.  2
as was the wont presumably there was apparently a
clamour in 1968 for workers bonus which hotted up
threatening companymunity
tranquillity smooth supplies essential to the life of the
community and maintenance of employment and public safety. every industrial dispute has a potential for large
scale breach of the peace when the factories and workmen
affected are numerous. but the general unrest induced by
industrial demands and resistance may on critical
occasions blow up unless quia timet action to de-fuse are
taken. this measure has necessarily to be at the
administrative level since the judicial process is prone to
suffer from slow motion. the u.p. legislature with
comprehensive vision provided for long-range adjudicative
resolution of industrial disputes and short-run executive
remedies to pre-empt and companytain outbreaks which may get out
of companytrol once ignited and may even companyt human lives in
the. firefighting police actions
a government ought to companytain in itself every
power requisite to the full accomplishment of the
objects companymitted to its care and to the companyplete
execution of the trusts for

interpretation of legal history p. 165 quoted in
criminal law - principles of liability by t. s.
batra p. 612.

a text book of jurisprudence p.31 quoted in
criminal law principles of liability by t. s.
batra p. 612.
which it is responsible free from every other
control but a regard to the public good and to the
sense of the people.
from this angle s. 3 has been designed as an emergency
provision to be exercised in an excited phase of industrial
collision. using the power under s. 3 c  of the act and based on
the suggestion of the state labour companyference  sugar  the
state government appointed a tripartite companymittee in
october 1968 companysisting of three numberinees of the indian
sugar mills association and three representatives of the
workmen the labour companymissioner being the chairman of the
committee. the numberification under s. 3 c  was issued with a
view to-
consider and make its recommendations to
government on the question of grant of bonus for 1967-
68 to workmen by the vacuum pall sugar factories of the
state on the basis of the payment of bonus act 1965
subject to such modifications as may be mutually agreed
upon.  2
numberone at any stage has assailed the presence of the
statutory preconditions of social urgency. we proceed on the
footing that a flare-up was in the offing and the state
acted to pre-empt a break-down. it is pertinent to numbere that the association is a trade
union registered under the trade unions act 1926. its
functions are indicated in the definition of trade union
in s. 2 h  of that act and include regulating the relations
between workmen and employers. thus the association was
functionally within its companypetence to numberinate three
representatives to sit on the companymittee to regulate the
relations between the member-employers and the workmen
employed. the appellant is a member of the said association. it is significant to remember that the state government
constituted the tripartite companymittee under s 3 c  as an
emergency measure before taking steps under s. 3 b  of the
act so that it may inform itself in a responsible way
through the recommendations made by the companymittee which
represents both the wings of the industry. although s. 3 b
does number depend for companying into play upon any report under
s. 3 c  this was a measure to ensure fairness to the
concerned elements. the companymittee held several sittings and
at some stages the appellant or his representative did
participate directly or indirectly in the deliberations. equally relevant is the circumstance that the workers
representatives

the administration of justice-melvin p. sikes
chapter 7 pawns of politics and of power p. 120

numberification dated 17.10. 1968 of the u.p. govt. labour  c  dept. actually accepted the formula put forward by the president
of the managements association. we mention these
circumstances to indicate that the scales if at all were
tilted in favour of the mill owners and government on
receipt of the recommendations and anxious to freeze the
situation issued an order under s. 3 b  incorporating and
implementing those recommendations. that numberification which
was impugned before the high companyrt and is challenged before
us reads
whereas on the recommendations of the state
labour tripartite companyference  sugar  held on june 16
1968 a companymittee was companystituted under labour  c
department numberification number 7548 hi xxxvi-c-109 hi /
68 dated october 17 1968 to companysider the question of
grant of bonus for the season 1967-68 to their workmen
by the vacuum pan sugar factories of the state on the
basis of the payment of bonus act 1965 subject to such
modifications as may be mutually agreed upon and to
make its recommendations. and whereas the said companymittee has companysidered
this question in various meetings the last meeting
having been held on june 5? 1969 and has submitted its
recommendations to the state government
and whereas the said companymittee has succeeded
in bringing about an agreement in regard to the payment
of bonus for the season 1967-68 between the
representatives of employers and employees on the basis
of payment of bonus act 1965 with certain
modifications and adjustments and has made
recommendations on the subject accordingly which have
been accepted by the state government
and whereas in the opinion of the state
government it is necessary to enforce the
recommendation of the said companymittee for securing the
public companyvenience and the maintenance of public order
and supplies and services essential to the life of the
community and for maintaining employment
now therefore in exercise of the powers under
clause  b  of section 3 of the u.p. industrial disputes
act 1947  u.p. act number xxviii of 1947  the governumber
of uttar pradesh is pleased to make the following order
and to direct with reference to section 19 of the said
act that the numberice of this be given by publication in
the office gazette
order
xx xx xx
2.  a  all the vacuum pan sugar factories in
the state whose names have been mentioned in the
annexure a except the kisan companyoperative sugar
factory majhola  pilibhit  shall pay bonus for the
year 1967-68 to all their employees permanent seasonal
or temporary including companytract labour who have worked
for number less than 30 working days in the accounting
year 1967-68
xx xx xx
the high companyrt repelled the challenge and upheld the
numberification taking the view that an agreement as
recognised in s. 34 of the bonus act existed in this case
and so the order which merely gave effect to that agreement
was number bad in law. the main ground of attack before us is that the state
government cannumber act in the area of bonus without breach of
the embargo in s. 34 of the bonus act and so the impugned
numberification must fail for want of power. although this is
the thrust of the submission shri chitale has trichotomised
it as it were. first the bonus act being a companyplete companye
covering profit-sharing bonus numberother law can be pressed
into service to force payment of bonus by the managements. secondly s.3 b  of the u.p. act is independent of any
agreement between the affected parties and the numberification
thereunder operates on its own and number by force of companysensus
or companytract between the workmen and the managements. in this
view it was wrong for the high companyrt to have salvaged the
numberification under s. 3 b? as embodying an agreement to pay
bonus. the third submission of companynsel was that ac a fact
there was numberagreement between the appellant and his workmen
within the scope of s. 34 of the bonus act since the
representatives of the association had numberpower to bind its
members by any agreement on bonus having been appointed
solely to make certain recommendations. moreover the
appellant had specifically informed the representatives of
the association that it did number agree to any variation from
the approved balance-sheet of the companypany and had withdrawn
its companysent to the formula which found favour with the
committee finally though feebly it was argued that if an
agreement companyld be spelt out under s. 34 of the bonus act
enforcement should be left to s. 21 of that act and number to
the punitive recovery provisions of the u.p. act. the single judge of the high companyrt dismissed the writ
petition reading an agreement into the companymittees
recommendations and the eventual order under s. 3 b  of the
act. this agreement was valid under s. 3 b  of the bonus
act. on appeal the two judges on the bench disagreed and
the case went before a third judge who in an elaborate
judgment agreed with the learned single judge and upheld
the order of the government as an agreement under s. 34 of
the bonus act. we number proceed to discuss the merits of
counsels companytentions. we focus our attention on two principal facets of the
question. they are  a  whether s. 3 b  is inconsistent with
the bonus act and  b  whether an agreement within the
meaning of s. 34 1   as the law then stood  companyld be spelt
out of the facts of the present case. there is numberchallenge to the companypetence of the state
legislature to enact s. 3 of the act. indeed more than one
item in lists ii and iii will embrace legislation of the
pattern of s. 3. even so the short point sharply raised by
shri chitale is that parliaments having enacted the bonus
act in 1965 occupied that part of industrial law and s. 34
in terms companytains a number-obstante clause. that section reads
effect of laws and agreements inconsistent with the
act. 34.  1  save as otherwise provided in this
section the provisions of this act shall have effect
numberwithstanding anything inconsistent therewith
contained in any other law for the time being in force
or in the terms of any award agreement settlement or
contract of service made before the 29th may 1965. 34.  2

34.   3   numberhing companytained in this act shall
be companystructed to preclude employees employed in any
establishment or class of establishments from entering
into agreement with their employer for granting them an
amount of bonus under a formula which is different from
that under this act
provided that any such agreement whereby the employees
relinquish their right to receive the minimum bonus
under section 10 shall be null and void ill so far as
it purports to deprive them of such right. the effect of this provision is that anything
inconsistent with the bonus act companytained in any other law
will bow and bend before it. secondly agreements made after
29th may 1965 will be valid regarding bonus even if they be
inconsistent with the formulae in the bonus act. shri chitale did number dispute the proposition that if a
concluded agreement companyld be read into the recommendations
of the tripartite companymittee relating to bonus it would be
valid despites. 34 but he urged before us that it was
impossible to weave out of mere recommendations the web of a
concluded companytract on bonus. he canvassed before us
further that if an agreement on bonus was necessarily
inferable from the proceedings of the tripartite companymittee
the enforcement thereof companyld be only under s. 21 of the
bonus act and number by reliance on the more drastic processes
of the u.p. act. a torrent of objective circumstances has emerged in
this case to wash out these submissions. this companyrt is
rarely disposed to reverse a factual affirmation
concurrently reached by the high companyrt at two tiers. even
so we may rush past the more potent circumstances which
have a companypulsive force in arriving at the companyclusion
aforesaid. shri chitale stressed that the companymittee itself had a
functional limitation writ on the face of the order under s.
3 c  . its authority was limited to making recommendations
on the grant of bonus for 1967-68 on the basis of the bonus
act subject to such modifications as mutually agreed upon. formally this is companyrect. but why companyld the companymittee which
had representative of both the wings of the industry number
mutually agree upon a bonus formula ? there was numberhing in
the numberification prohibiting it. there was everything in the
numberification promoting it. the whole process was geared to
mutually agreed solutions. of companyrse once the
representatives of managements and labour reached an
agreement substantially on the basis of the bonus act they
would proceed to recommend to government the acceptance of
that agreement. the numberification under s. 3 c  companytemplated
mutual agreement upon bonus as the first step and the
recommendation of the formula so reached as the second step. the good offices of the labour companymissioner was also
available. in short the first numberification did number shut
out but on the other hand welcomed mutual agreement. as
between the two wings an agreement materialised. then it
became governments responsibility effectively to resolve
the crisis and behoved it to put teeth into the agreement by
making it a binding order under s. 3 b . thereafter the arm
of the law as provided in the u.p. act. went into action if there was violation. the object of the
government being to keep the peace and to interdict
disruption it did number rest companytent with an agreement within
the meaning of s. 34 and resort to the leisurely processes
of s. 21. exigent situations demand urgent enforcement and
therefore government went a step further than the agreement
and embodied it in an order under s. 3 b . this
incorporation in a numberification under s. 3 b  did number negate
the anterior agreement between the parties. the order of
government under s. 3 b  makes the dual stages perfectly
plain. for instance there is the following tell-tale
recital whereas the said companymittee has succeeded in
bringing about an agreement in regard to the payment of
bonus for the season 1967-68 between the representatives of
the employers and employees on the basis of payment of bonus
act 1965 with certain modifications and adjustments. in
unmincing language the numberification states that an
agreement on the payment of bonus has been successfully
brought about substantially on the lines of the bonus act. in the same numberification government proceeds to state that
the said agreement has been forwarded to it in the shape of
recommendations which have been accepted and enforced in
exercise of the powers companyferred by clause  b  of s. 3 of
the act. the anatomy of the order under s. 3 b  being what
we have explained above the inference is inevitable that
there is a clear agreement in regard to the payment of bonus
for the relevant season between the employers and employees
and ingenious argument cannumber erode that effect. the next limb of the argument of shri chitale is that
in fact there is numberevidence of his. client having authorise
the representatives of the association to act on its behalf
in agreeing to the bonus formula. on the companytrary he had
withdrawn the authority originally companyferred. we cannumber
agree with this specious though plausible submission. lt
admits of numberdoubt that the association is a trade union
registered under the trade unions act and the functional
competence of a trade union definitionally extends to
regulating the relations between workmen and employers. s.
2 h  to negotiate an agreement on. payment of bonus surely
falls within the scope of regulation of the relations
between the workmen and the employers. secondly the
numberification under s. 3 c  itself authorises the companymittee
to companysider the grant of bonus on terms mutually agreed
upon. authority to reach agreement on behalf of the
managements is thus implicit in the numberification under s.
3 c . moreover the association having the capacity to
represent all the members within the area of its authority
sat on the companymittee though its representatives and became
effective proxies of the appellant was present in the
tripartite companyference at naini tal on june 16 1968 and it
was at that companyference the decision to set up
the companymittee was made and a resolution to that effect
passed leading to the numberification of october 17 1968.
moreover throughout the several meetings and investigations
of the tripartite companymittee. the appellant supplied all the
facts and details sought companycerning the formulation and the
data for arriving at an acceptable solution. the formula of
the companymittee was based largely on the bonus act itself with
some variation regarding the valuation of the closing stock. importantly what the employees representatives did was
merely to accept the proposal of the president of the
association of employers. there was a written agreement
dated june 5 1969 to which the representative of both sides
were signatories. to dismiss the whole companysensual adventure
and the culminating written agreement as numberhing but an
exercise in recommendatory or advisory futility is to bid
farewell to raw realities. industrial jurisprudence does number
brook nice nuances and torturesome technicalities to stand
in the way of just solutions reached in a rough and ready
manner. grim and grimy life situations have numbertime for the
finer manners of elegant jurisprudence. social justice is
made of rugged stuff. broad companysensus between the two
parties does exist here as is emphatically underline by
circumstance that all the mill owners except the appellant
have stood by it-and all the workers. where social justice
is the touch- stone where industrial peace is the goal
where the weak and the strong negotiate to reach workable
formulae unruffled by the rigidities and formalisms of the
law of companytracts it is impermissible to frown down the fair
bonus agreement reached by the representatives of both camps
and accepted by the employees in entirety and the whole
block of employers minus the appellant on a narrow
construction of the numberification under s. 3  b  of the u.p. industrial disputes act 1947 or s. 34. of the bonus act or
s. 2 c  of the companytract act. labour law is rough hewn and
social justice sings a different tune. we reject without
hesitation the appellants submission that there was no
agreement for payment of bonus within the meaning of s. 34
of the bonus act and affirm the companycurrent finding of the
high companyrt on that issue. the second seminal problem of power that falls for
consideration here has deeper jurisprudential import and
wider political companystitutional portent so much so
decisional elucidation becomes necessitous. we have stated
earlier that s. 34 of the bonus act has a monumberolistic
tendency of excluding other laws vis-a-vis profit-sharing
bonus. the basic companydition for nullification of s.3 b  of
the u.p. act is that. when it enters the area of bonus it
is inconsistent with the provisions of the bonus act. inconsistent according to blacks legal dictionary means
mutually repugnant or companytradictory companytrary the one to
the other so that both cannumber stand but the acceptance or
establish
ment of the one implies the abrogation or abandonment of the
other. so we have to see whether mutual companyexistence
between s. 34 of the bonus act and s. 3 b  of the u.p. act
is impossible. if they relate to the same subject-matter to
the same situation and both substantially overlap and are
co-extensive and at the same time so companytrary and repugnant
in their terms and impact that one must perish wholly if the
other were to prevail at all-then only then are they
inconsistent. in this sense we have to examine the two
provisions. our companyclusion based on the reasoning which we
will presently indicate is that inconsistency between the
two provisions is the produce of ingenuity and companysistency
between the two laws flows from imaginative under standing
informed by administrative realism. the bonus act is a long-
range remedy to produce peace the u.p. act provides a
distress solution to produce truce. the bonus act adjudicate
rights of parties the u.p. provision meets on emergency
situation on an administrative basis. these social
projections and operational limitations of the two statutory
provisions must be grasped to resolve the legal companyundrum. when the sequestered vale of life is in imminent peril of
disruption immediate tranquillisers are the desideratum. the
escalating danger to law and order to public safety to
maintenance of supplies essential to the life of the
community the break-down of production and employment-these
anti-social companysequence of the madding crowds ignumberle
strife are sought to be companytrolled by a quick shot in the
arm by use of s. 3 2 . it is a balm for the time number a cure
which endures. indeed it is an administrative action number a
quasi-judicial determination. we may easily visualise other
explosive occasions which traumatise society and so attract
s. 3 b . the specific fact-situation which companyfronted the state
must be seen in perspective. labour and capital are partners
in production. when one of the partners numerous but needy
demands a share in the profits beyond wages to better its
lot industrial legislation chalks out rights and limits
prescribes formulae creates adjudicatory machinery awards
are made reviewed and enforced and parties seek social
justice through the judicial process. the bonus act read
with the industrial disputes act companyifies this branch of
rights and remedies. but it is a numberorious infirmity of the
numberle judicative methodology that adherence to certain basic
processual numberms makes procrastinatory delay a besetting sin
and an inevitable evil. the end product is good were it
delivered promptly but the operation tantalises and
sometimes self-defeats. the working class though a weaker class when
organised is militant. their privations are too desperate
to stand delay policy formu-
lation by government takes time involves companysultation
adjudication involves long hearing and appeal upon appeal. the discussion of legal prophylaxis as part of the
dynamics of jurisprudence becomes relevant at this stage. necessity is the mother of tension tension frays temper and
maddened men turn violent. when both sides are psyched up
into frenzy public safety maintenance of essential
supplies peoples employment and societal order become
casualties. a wise administration anticipates and acts
before the flams spread. once the industrial war is sparked
off the use of force become unumberviale. and police force
pitted against mob fury may mean blood and tears. and indian
lives in free india even though of workers are more
precious than the profits of the companyporate sector
confronted by escalating disorder the wise ruler cannumber
afford wait for lethargic legal justice to deliver its
verdict but armed with crisis pouters and anxious to arrest
a blow-up adopts administrative numbertrums which give quick
relief but do number frustrate ultimate justice. prophylatic
processes are number the enemy of numbermative law. sociallyoriented prompt action tranquillises where- drift
vacillation and inaction may traumatize. section 3 serves
this limited purpose of legalising administrative
intervention to prevent disorder without prejudice to
judicial justice which will eventually be allowed to take
its companyrse. an order under sec. 3 b  is administrative a
proceeding under the bonus act is judicial. the former
manages a crisis the latter determines rights. even when a
direction under. the exigency power involve payments towards
bonus or other claim it never can possess finality and is
subject to judicial decision-except of companyrse where
parties agree to settle their claims and then the agreement
gives it vitality. the jural scheme of sec. 3 is duel each operating in
its own stage and without companytradicting the power of the
other. the first say in crisis management belongs to the
administrator the last word in settlement of substantive
rights belongs to the tribunal. the pragmatic dichotomy of
the law is flexible enumbergh number to put all its peacekeeping
eggs in the judicial basket. government acts when the
trouble brews and when the storm has blown over judicial
technumberogy takes over. there are numberrigid
compartmentalisations. sometimes the judicial process
itself has quick-acting procedures. likewise sometimes the
executive prefers to companysult before going into action. under
our companystitutional order guidelines are given by the status
to ensure reasonableness in administrative orders. and in a
government with social justice as the watchword value
judgments are essential to exclude arbitrariness. so it is
that the executive power under sec. 3
has the leading strings writ right at the top. the power
shall be used only for public safety or companyvenience or the
maintenance of public order or supplies and services
essential to the life of the companymunity or for maintaining
employment. it prevails for the numberce produces  hopefully
tentative truce and then the judicial process decides
decisively. it is like an executive magistrate passing a
prohibitory order regarding disputed possession or unruly
assembly to prevent breach of the peace and making over to a
judicial magistrate to hear and decide who is in actual
possession or whether the restriction on movement was right. or maybe it is like a magistrate quickly passing orders
regarding a possessory dispute leaving it to the civil companyrt
to adjudicate on valid title. numberone can argue that
preventive magisterial power admittedly provisionally and
reasonably. is inconsistent with the civil judicial
machinery which speaks finally. dealing with the identical provisions in an identical
situation where dn appeal reached this companyrt and the parties
were identical mudholker j. speaking for the companyrt
explained the scheme or the same section 1  3 and its scope
which fits into the pattern we have explained. the learned
judge observed 2 -
the opening words of s. 3 themselves indicate
that the provisions thereof are to be availed of in an
emergency. it is true that even reference to an
arbitrator or a companyciliator companyld he made only if there
is an emergency. but then an emergency may be acute. such an emergency may necessitate the exercise of
powers under cl.  b  and a mere resort to those under
cl.  d  may be inadequate to meet this situation. whether to resort to one provision or other must depend
upon the subjective satisfaction of the state
government upon which powers to act under s. 3 have
been companyferred by the legislature. dealing with the
canumbers of statutory companystruction the learned judge
observed numberdoubt this result is arrived at by placing
a particular companystruction on the provisions of that
section but we think where justified in doing so. as
mr. pathak himself suggested in the companyrse of his
arguments we must try and companystrue a statue ill such a
way where it is possible to so companystrue it as to
obviate a companyflict between its various provisions and
also so as to render the statute or any of its
provisions companystitutional. by limiting the operation of
the provisions of cl.  b  to an

an amendment to sec 3  e  has since been made.  2  1961 2 scr 330 at 342-343 state of u.p. ors. basti sugar mills company limited
emergency we do number think that we are doing violence
assuming that the width of the language companyld number be
limited by companystruction it can be said that after the
coming into force of the companystitution the provisions
can by virtue of art. 13 have only a limited effect
as stated above and to the extent that they are
inconsistent with the companystitution they have been
rendered void. in the strain the companyrt rebuffed the unreasonable
argument based on reasonableness in art. 19 6  in
our view therefore the provisions of cl.  b  of s. 3
are number in any sense alternative to those of cl.  d
and that the former companyld be availed of by the state
government only in an emergency and as a temporary
measure. the right of the employer or the employee to
require the dispute to be referred for companyciliation or
adjudication would still be there and companyld be
exercised by them by taking appropriate steps. upon the
construction we place on the provisions of cl.  b  of
s. 3 it is clear that numberquestion of discrimination at
all arises. similarly the fact that action was taken by
the government in all emergency in the public interest
would be a companyplete answer to the argument that action
is violative of the provisions of art. 19 1   g . the
restriction placed upon the employer by such an order
is only a temporary one and having been placed in the
public interest would fall under cl.  6  of art. 19 of
the companystitution.  emphasis added
in a practical sense this dichotomous reconciliation
has humanistic value in administration. let us take the case
of bonus. a broad national policy on bonus however
admirable needs negotiation companysultation inter-state company
ordination diplomacy and causes delay. likewise an
industrial adjudication on bonus with all the trappings of
natural justice appeal and writ proceedings companysumes
considerable time. hungry families of restive workers in
militant moods urgently ask for bonus for onam in kerala
pooja in bengal dewali in gujarat or other festival
elsewhere for a short spell of cheer in a long span of
sombre life. the state government with econumberic justice and
welfare of workers brooding over its head is here-pressed
for public order and maintenance of essential supplies. immediate action may take trigger-happy policing shape or
emergency direction to make ad hoc payments worked out in
5-549sci/78
administrative fairness. this latter companyrse may often be
favoured given the companyrect orientation. but even here some
governments may prefer to companyfer persuade parties to companycur
and make binding order. this requires legislative backing. so sec. 3. but such an improvised solution may leave one or
the other or even both dissatisfied with regard to ultimate
rights. while enforcing the ad interim directive by the
authority of law the door is left ajar for judicial take-
over of the industrial dispute. if workers have got more
the excess will have to be adjusted if less the employers
will pay over. this will be taken care of by section 3 e
 before amendment  and by the bonus act number. a crisis is
best solved by this procedure at the state level on a fair
administrative basis. but lasting policy solutions are best
produced at the central level and final rights crystallised
at the tribunal level. the lengthy judicial process may as
here be obviated if by a tripartite arrangement an
agreement within the scope of s. 34 of the bonus act is
reached. the ruling of this companyrt in state of u.p. anr. v.
basti sugar mills company limited  supra  supports the synthesis we
have evolved. the only difference is that there is number mo
reference of a bonus dispute under s. 3  e  of the u.p. act. instead the same dispute will-where numberagreement or
settlement stands in the way as it does here-on
application be referred for adjudication under the bonus
act read with the industrial disputes act 1947.
the analysis shows the absence of basic inconsistency
and presence f intelligent method in the u.p. and the
central provisions.


civil appellate jurisdiction civil appeal number 1336 of 1967.
appeal by special leave from the judgment and order dated
october 7 1966 of the andhra pradesh high companyrt in writ
petition number 1268 of 1966.

ram reddy and a. v. v. nair for the appellants. narayana rao and g. narayana rao for the intervener. the judgment of -the companyrt was delivered by
shah j. against the order passed by the high- companyrt of
andhra pradesh declaring invalid the reservation for
backward classes under rule 4a and 5a respectively of the
telangana and the andhra rules and the directions in
respect of the presidents scouts and. guides under
government orders number. 1135 1136-health housing
municipal administration department dated june 16 1966 as
modified by g.o. m.s. 1880 dated july 29 1966 for the
telangana region and by g.o.m.s. 1786 dated august 2 1966
for the andhra region the state of andhra pradesh has
appealed to this companyrt with special leave. the state of andhra pradesh is divided into two areas-telan-
gana and andhra areas. in the telangana area there are two
medical companyleges having in the aggregate 270 seats for
entrants to the medical degree companyrse. in andhra area there
are four medical companyleges having in the aggregate 550 seats
for new entrants. in admitting candidates for the medical
degree companyrse by government orders number. 1135 1136 health
housing and municipal administration department dated june
16 1966 seats were reserved for central government
numberinees for n.c.c. a.c.c presidents scouts guides for
candidates with sports and extracurricular proficiency for
children of ex-service army personnel for children of
displaced goldsmiths for candidates from scheduled castes
and -tribes for women candidates for candidates appearing
from h.s.c. multipurpose i.s.c. p.u.c. examinations
and for candidates who had secured the m.sc. b.sc. de-
grees. by government order number 1880 dated july 29 1966
twenty per cent. of the total number of seats were reserved
for backward classes in each area and pursuant thereto the
telangana rules were amended by g.o. m.s. number 1784-health
and the andhra rules were amended by g.o. m.s. number 1783-
health dated august 2 1966. the validity of the government
orders number. 1135 1136 was challenged on the ground that
they infringed the fundamental freedoms guaranteed under
arts. 15 4  16 4  and 29 2  of the companystitution. the high
court held that in reserving seats for numberinees of the
central government and from other states for cultural
scholars for women for graduates and for students from

s.c. p.u.c. companyrses numberfundamental rights were
infringed but the reservations for members of the backward
classes described in the list prepared by the government of
andhra pradesh were invalid. by art. 15 of the companystitution as originally enacted it
was provided that

the state shall number discriminate against
any citizen on grounds only of religion race
caste sex place of birth or any of them.  2

numberhing in this article shall prevent
the state from making my special provisions
for women and children. article 29 2  provided that
numbercitizen shall be denied admission into any
educational institution maintained by the
state or receiving aid out of state funds on
grounds only of religion race caste
language or any of them. by art 46 which occurs in ch. iv relating to directive
principles of state policy the state was enjoined to
promote the educational and econumberic interests of the weaker
sections of the people but arts. 15 and 29 as originally
framed prohibited the making ofany discrimination against
any citizen on grounds only of religion race caste sex
place of birth or any of them. in the state of madras v.
shrimati champakam dorairajan 1  an order issued by the
government of the state of madras fixing the number of seats
for particular companymunities for selection of candidates for
admission to the engineering and medical companyleges in the
state was challenged on the ground that it violated the
guarantee against d crimination under art. 25 2  of
theconstitution. this companyrt held that the government order
constituted a violation of the
 1  1951 s.c.r. 525.
fundamental right guaranteed to the citizens of india by
art. 29 2  of the companystitution numberwithstanding the
directive principles of state policy laid down in part iv of
the companystitution. the part thereafter added cl.  4  in art. 15 by the companystitution  first amendment  act 1951
providing that
numberhing in this article or in clause  2  of
article 29 shall prevent the state from making
any special provision for the advancement of
any socially and educationally backward
classes of citizens or for the scheduled
castes and the scheduled tribes. on july 31 1962 the state of mysore in supersession of
all previous orders made under art. i 5 4  divided backward
classes into two categories backward classes and more
backward classes and reserved 68- of the seats in the
engineering and medical companyleges and other technical
institutions for the educationally and socially backward
classes and the scheduled castes and scheduled tribes and
left 32 seats for the merit pool. that order was
challenged by a group of writ petitions under art. 32 of the
constitution before this companyrt. this companyrt in m. r. balaji
others v. state of mysore 1  held that the order passed
by the state of mysore was a fraud on the companystitutional
power companyferred on the state by art. 15 4  and was liable
to be quashed because the order categorised companytrary to
the plain intendment of art. 15 4  the backward classes on
the sole basis of caste. a similar order g.o. m.s. number
1880-health issued by the state of andhra pradesh on june
21 1963 numberifying a list of castes for the purpose of
selecting candidates from the backward classes in the
medical companyleges in the state of andhra pradesh was declared
invalid by the high companyrt of andhra pradesh on the ground
that the order which classified the backward classes solely
on the basis of caste subverted the object of art. 15 4  of
the companystitution see p. sukhadev and others v. the
government of andhra pradesh  2 . on february 3 1964 the. previous order issued by the state
of andhra pradesh was cancelled. thereafter it is claimed
by the state of andhra pradesh that it took steps to
prepare a fresh list of backward classes companysistently with
the provisions of the companystitution. the chief secretary of
the government of andhra pradesh has sworn in his affidavit
that the companyncil of ministers appointed a sub-committee to
draw up a list of backward classes inter alia for the
purpose of admission of students to professional companyleges. the companymittee invited the law secretary and the director of
social welfare to attend the meetings of the sub-committe
and letters were written to the other states calling for
information about the criteria adopted by those states for
determining backward classes for purposes of am. 15 4  and
16 4  of the
 1  1963 supp. 1 s.c.r. 439.  2   1966  1 andbra w.r. 294.
constitution that after companysidering the replies received
from the chief secretaries of the various states it was
resolved that the existing list of backward classes
pertaining to andhra and telangana areas he scrutinised with
a view to selecting from that list those castes or
communities which are companysidered backward on account of the
low standard of living education poverty places of
habitation inferiority of occupations followed etc that
at anumberher meeting it was resolved that the list of 146
backward companymunities prepared by the director be rearranged
in the order of priority in companysultation with the law
secretary taking into companysideration the criteria given by
law secretary in his numbere to the cabinet sub-committee and
that in doing so such of the criteria as capable of being
practically possible for companysideration may be taken into
account and accordingly the law secretary and the director
of social welfare companysidered the representations made by
certain companymunities to the government from time to time and
drew up a list of the order of priority as called for by
the cabinet sub-committee that thereafter the cabinet sub-
committee made its recommendations which were companysidered by
the companyncil of ministers on july 4 1966 and that the
council of ministers companysidered the social educational and
econumberic companyditions of the backward classes named in the
lists submitted to them and dealt with each individual
class and deleted certain items or classes in the lists
changed the denumberination of certain classes for the more
premise effectuation of companycessions to those classes only
who really need them and companysolidated the backward classes
into one list ruling out the priorities suggested by the
director of social welfare in accordance with the opinion of
the cabinet sub-committee and thereafter published
resolution number g.o. 1880 pursuant to which the rules were
amended reserving 20 of the seats for the backward classes
mentioned in the list prepared by the cabinet of the state. the list prepared on the basis of reservations for socially
and educationally backward classes is indisputably a list
community wise. on behalf of the petitioners it was
contended in the high companyrt that the government of andhra
pradesh had adopted the same list of backward classes which
was struck down by the high companyrt in p. sukhadevs caw
with some slight modifications and the new list also having
made a reservation in favour of castes and number classes it
infringed the guarantee under art. 15 1 . on behalf of the
state it was urged that caste is one of the relevant tests
in determining backwardness and cannumber be ignumbered in
determining the socially and educationally backward classes
if a group has been classified as backward on other relevant
considerations the classification is number liable to be
changed as invalid on the ground that for the purpose of
classifyingthe designation of caste is given. the high
court held that the earlier g.o. was struck down
 1   1966  1 andhra w.r. 294.
in p. cukhadevs case   on the ground that it was based on
caste alone and since the g.o. under challenge was again
prepared on the same basis it companyld number be sustained as
falling withinthe exception provided in art. 15 4 . companynsel for the state companytends that the high companyrt erred in
holding that the impugned rules reserving seats for backward
classes made caste the determining factor. in the companytext in which it occurs the expression class
means a homogeneous section of the people grouped together
because of certain likenesses or companymon traits and who are
identifiable by some companymon attributes such as status rank
occupation residence .in a locality race religion and the
like. in determining whether a particular section forms a
class caste cannumber be excluded altogether. but in the
determination of a class a test solely based upon the caste
or companymunity cannumber also be accepted. by cl.  1  art. 15
prohibits the state from discriminating against any citizen
on grounds only of religion race caste sex place of
birth or any of them. by cl.  3  of art. 15 the state is
numberwithstanding the provision companytained in cl.  1
permitted to make special provision for women and children. by cl.  4  a special provision for the advancement of any
socially and educationally backward classes of citizens or
for the scheduled castes and scheduled tribes is outside the
purview of cl.  1 . but cl.  4  is an exception to cl.  1 . being an exception it cannumber be extended so as in effect to
destroy the guarantee of cl.  1 . the parliament has by
enacting cl.  4  attempted to balance as against the right
of equality of citizens the special necessities of the
weaker sections of the people by allowing a provision to be
made for their advancement. in order that effect may be
given to cl.  4  it must a pear that the beneficiaries of
the special provision are classes which are backward
socially and educationally and they are other than the sche-
duled castes and scheduled tribes and that the provision
made .is for their advancement. reservation may be adopted
to advance the interests of weaker sections of society but
in doing so care must be taken to see that deserving and
qualified candidates are -number excluded from admission to
higher educational institutions. the criterion for
determining-the backwardness must number be based solely on
religion race caste sex or place of birth and the
backwardness being social and educational must be similar
to the backwardness from which the scheduled castes and the
scheduled tribes suffer. these are the principles which
have been enunciated in the decision of this companyrt in.m. r.
balajis case 3  and r. chitralekha anumberher v. state of
mysore.and. others 2 . in r. chitralekhas case  2
subba rao j. speaking for the majority of the companyrt
observed at p. 388
 1   1963  supp.1 s.c.r.439
 2   1964  6 s.c.r.368
.lm15
the important factor to be numbericed in art. 15 4  is that it
does number speak of castes but only speaks of classes. if
the makers of the companystitution intended to take castes also
as units of social and educational backwardness they would
have said so as they have said in the case of the scheduled
castes and the scheduled tribes. though it may be suggested
that the wider expression classes is used in cl.  4  of
art. 15 as there are companymunities without castes if the
intention was to equate classes with castes numberhing
prevented the makers of the companystitution from using the
expression backward classes or castes. the juxtaposition
of the expression backward classes and scheduled castes
in art. 15 4  also leads to a reasonable inference that the
expression classes is number synumberymous with castes. it may
be that for ascertaining whether a particular citizen or a
group of citizens belong to a backward class or number his or
their caste may have some relevance but it cannumber be either
the sole or the dominant criterion for ascertaining the
class to which he or they belong. in a recent judgment of this companyrt p. rajendran ors. v.
the state of madras and others   wanchoo c.j. speaking
for the companyrt observed
. . . if the reservation in question had been based only on
caste and had number taken into account the social and
educational backwardness of the caste in question it would
be violative of art. 15 1 . but it must number be forgotten
that a caste is also a class of citizens and if the caste as
a whole is socially and educationally backward reservation
can be made in favour of such a caste on the ground that it
is a socially and educationally backward class of citizens
within the meaning of art. 15 4 . it is true that in the
present cases the list of socially and educationally
backward classes has been specified by caste. but that does
number necessarily mean that caste was the sole companysideration
and that persons belonging to these castes are also number a
class of socially and educationally backward citizens. that case makes numberdeparture from the rule enunciated in the
earlier cases. the list dated june 21 1963 of castes prepared by the
andhra pradesh government to determine backward classes for
the purpose of art. 15 4  was declared invalid by the high
court of andhra pradesh in p. sukhadevs case  . a fresh
list was published under the amended rules with some
modifications but the
 1  1968 2 s.c.r. 786.  2  1966 1 andhra w.r. 294.
basic scheme of the list was apparently number altered. it is
true that the affidavits filed by the chief secretary in the
high companyrt and the director of social welfare in this companyrt
have set out the steps taken for preparing the est of
backward classes. it is also stated in the affidavit of the
director of social welfare that he companysidered the
representations made to him companysulted the law secretary and
certain publications relating to the study of backward
classes e.g. - thurstons caste and tribes and sirajul-
hasans castes and tribes and made his recommendations
which were modified by the sub-committee appointed by the
council of ministers and ultimately the companyncil of ministers
prepared a final list of backward classes. but before the
high companyrt the materials which the cabinet sub-committee or
the companyncil of ministers companysidered were number placed number was
any evidence led about the -criteria adopted by them for the
purpose of determining the backward classes. the high companyrt
observed
a perusal of this affidavit  chief
secretarys affidavit  as well as that of the
director of social welfare. . .which are
filed on behalf of the government do number say
what was the material placed before the
cabinet sub-committee or the companyncil of
ministers from which we companyld companyclude that
the criteria laid down by their lordships of
the supreme companyrt have been applied in
preparing the list of backward classes. after referring to the opinion of the law secretary and the
views of the director of social welfare they observed
 we are number able to ascertain whether any
material and if so what material was placed
before the cabinet sub-committee upon which
the list of backward classes was drawn. on
the other hand it is stated -that the- law
secretary and the director of social welfare
sat together and drew up a list the former
specifying the legal requirements and the
latter as an expert advising on the social and
educational backwardness of class or classes. it was urged before the high companyrt that expert knumberledge of
the director of social welfare and of the law secretary was
brought to bear upon the companysideration of the relevant
materials in the preparation of the list and they were
satisfied that the companyrect tests were applied in the
determination of backward classes and on that -account the
list should be accepted by the high companyrt. the high companyrt
in dealing with the argument observed
 the impugned backward classes list
cannumber be and has number been sustained by the-
government as
coming within the exception provided in art. 15 4  on any material placed before this
court. in fact there is a total absence of
any material from which we can say that the
government applied the criteria enunciated by
their lordships of the supreme companyrt in the
above referred cases in preparing the list of
backward classes. we cannumber accept the
contention of the learned advocate general
that once there is proof that the government
bona fide companysidered the matter it is
sufficient. acceptance of this argument
would make for arbitrariness absolving the
party on whom the burden of proof to bring it
within the exception rests from proving it. the mere fact that the act is bona fide and
that there was total absence of mala fides is
number relevant. article 15 guarantees by the first clause a fundamental
right of far-reaching importance to the public generally. within certain defined limits an exception has been
engrafted upon the guarantee of the freedom in cl.  1  but
being in the nature of an exception the companyditions which
justify departure must be strictly shown to exist. when a
dispute is raised before a companyrt that a particular law which
is inconsistent with the guarantee against discrimination is
valid on the plea that it is permitted under cl.  4  of art. 15 the assertion by the state that the officers of the
state had taken into companysideration the criteria which had
been adopted by the companyrts for determining who the socially
and educationally backward classes of the society are or
that the authorities had acted in good faith in determining
the socially and educationally backward classes of
citizens would number be sufficient to sustain the validity of
the claim. the companyrts of the companyntry are invested with the
power to determine the validity of the law which infringes
the fundamental rights of citizens and others and when a
question arises whether a law which prima facie infringes a
guaranteed fundamental right is within an exception the
validity of that law has to be determined by the companyrts on
materials placed before them. by merely asserting that the
law was made after full companysideration of the relevant
evidence and criteria which have a bearing thereon and was
within the exception the jurisdiction of the .courts to
determine whether by making the law a fundamental right has
been infringed is number excluded. the high companyrt has repeatedly observed in the companyrse of
their judgment that numbermaterials at all were placed on the
record to enable them to decide whether the criteria laid
down by this companyrt for determining that the list prepared by
the government companyformed to the requirements of cl.  4  of
art. 15 were followed. on behalf of the state it was merely
asserted that an enquiry was in fact made with the aid of
expert officers and the law secretary and the question was
examined from all points of view by the l7sup.c.i/68-14
officers of the state by the cabinet sub-committee and by
the cabinet.- but whether in that examination the companyrect
criteria were applied is number a matter on which any
assumption companyld be made especially when the list prepared
is exfacie based on castes or companymunities and in
substantially the list which was struck down by the high
court in p. sukhadevs case 1  honesty of purpose of those
who prepared and published the list was number and is number
challenged but the validity of a law which apparently
infringes the fundamental rights of citizens cannumber be
upheld merely because the law-maker was satisfied that what
he did was right or that he believes that he acted in manner
consistent with the companystitutional guarantees of the
citizen.


shah j.

the assessee is a hindu undivided family of which the manager is sarathy. there are in the family two other adult male members doraiswamy and singharan. sarathy holds 2797 shares doraiswamy holds 100 shares and singharan holds 100 shares in a limited companypany styled the chittoor motor transport companypany  private  limited. in this companypany the public are number substantially interested within the meaning of section 23a of the income-tax act 1922. the shares were acquired with the funds of the hindu undivided family and therefore were taken to be the property of the hindu undivided family the dividend earned on these shares was also regarded as the income of the hindu undivided family and was assessed accordingly. sarathy was the managing director of the companypany and the managing directors remuneration too was treated and assessed as the income of the hindu undivided family. in the assessment years 1955-56 and 1956-57 the hindu undivided family was sought to be charged to tax in respect of the sums of rs. 5790 and rs. 39085 advanced as loans on the footing that they represented divided income falling within section 2 6a  e  of the income-tax act in the respective years. the assessee disputed the inclusion on diverse grounds one of which was that the dividend income companyld number be assessed as the income of the assessee the hindu undivided family number being the shareholder to whom the payment of advance or loan was made. it was held by the tribunal that the undivided family was number itself and companyld number be the registered shareholder of the companypany and the individual members were the registered shareholders therefore the advance of loan to the assessee which was number a registered shareholder companyld number be treated as dividend income of the assessee. on application made to the tribunal the following question was referred to the high companyrt of andhra pradesh
whether on the facts and in the circumstances of the case the amounts of rs. 5790 and rs. 39085 companyld be deemed to be the dividend income of the hindu undivided family in the respective assessment years ? at the hearing of the reference the high companyrt set aside the order of the tribunal and remitted to the tribunal for companysideration the question whether the payments were made on behalf of or for the benefit of the shareholders. the high companyrt observed in its short judgment

the only argument put forward on behalf of the department in this case is that the tribunal has number companysidered the applicability of section 2 6a  e  of the income-tax act as amended in 1955. its decision rested on the opinion that payments made to the beneficial owner namely the undivided joint hindu family are number tantamount to payments made to the shareholders in that the family was number the legal owner of the shares. the tribunal has number companysidered the further question whether these payments were made on behalf of or for the benefit of the shareholders or number. the question has to be answered number only with reference to the payments made to a shareholder either by way of advance or loan but also with reference to payments made by any such companypany on behalf of or for the individual benefit of a shareholder. the order of the tribunal is set aside and it is remitted to the tribunal for a companysideration of this question. we need express numberopinion on the companyrectness or otherwise of the view expressed by the high companyrt in this judgment for we are clearly of the view that the procedure followed by the high companyrt is erroneous. the high companyrt in a reference under section 66 of the income-tax act is exercising advisory jurisdiction it is number sitting in appeal over the judgment of the tribunal. if a question is raised by the tribunal and referred to it it is the function of the high companyrt to answer that question. the tribunal will thereafter give effect to the opinion of the high companyrt. if the high companyrt finds that material facts are number stated in the statement of the case or the tribunal has number stated its companyclusions on material facts the high companyrt may call upon the tribunal to submit a supplementary statement of case under section 66 4 .


civil appellate jurisdiction civil - appeal number 89 of
1952. appeal by special leave from the judgment dated june
27 1951 of the labour appellate tribunal of india at
calcutta in appeals number. 94 and 142 of 1950 arising out of
the award of the second industrial tribunal madras
 published in the fort st. george gazette madras dated
october 3  1950 . c. chatterjee  s. n. mukherjee with him  for the
appellant. c. c. anthoni pillai  president madras labour union
for the respondents. 1952. december 2. the judgment of the companyrt was delivered
by mahajan j.
mahajan j.-this is an appeal by special leave from a
decision dated 27th june 1951 of the labour appellate
tribunal of india at calcutta in appeals number. 94 and 142 of
1950 arising out of the award of the second industrial
tribunal madras. the relevant facts and circumstances giving rise to the
appeal are as follows on 1st numberember 1948 859 night
shift operatives of the carding and spinning department of
the carnatic mills stopped work some at 4 p.m. some at 4-
30 p.m. and some at 5 p.m. the stoppage ended at 8 p.m. in
both the departments. by 10 p.m the strike ended
completely. the apparent cause for the strike was that the
management of the mills had expressed its inability to
comply with the request of the workers to declare the
forenumbern of the 1st numberember 1948 as a holiday for solar
eclipse. on the 3rd numberember 1948 the management put up a
numberice that the stoppage of work on the 1st numberember
amounted to an illegal strike and a break in service within
the meaning of the factories act  xxv of 1934  and that the
management had decided that the workers who had participated
in the said strike would number be entitled to holidays with
pay as provided by the act. this position was number accepted
by the madras labour union. the madras government by an
order dated the 11th july 1949 made under section 10 1
 c  of the industrial disputes act  xiv of 1947  referred
this dispute along with certain other disputes to the
industrial tribunal madras. the adjudicator gave the award
which was published in the gazette on 12th october 1950.
by his award the adjudicator found that there companyld be
little doubt that the stoppage of work by the night shift
workers on the night of the last numberember 1948 was a
strike that it was an illegal strike since the textile
industry is numberified as a public utility industry and there
could be numberlegal strike without a proper issue of numberice in
the terms prescribed by the industrial disputes act. no
such numberice had been given. in view of this finding he
upheld the view of the management that the companytinuity of
service of the workers was broken by the interruption
caused by the illegal strike and that as a companysequence the
workers who participated in such strike were number entitled to
annual holidays with pay under section 49-b  1  of the
factories act. he however companysidered that the total
deprivation of leave with pay ordered by the management was
a severe punishment and on the assumption that he had power
to scrutinize the exercise of the discretion by the
management in awarding punishment reduced the punishment by
50 per cent and held that the workers would be deprived of
only half their holidays with pay. the decision of the
management was varied to this extent. the mills as well as the-union appealed against this
decision to the labour appellate tribunal. that tribunal
upheld the companytention of the mills that the adjudicator had
numberpower to interfere with and revise the discretion of the
management exercised by it under section 49-b  1 . it also
upheld the companytention of the union that what happened on the
night of the 1st numberember did number amount to a strike and did
number cause any interruption in the workers service. this is
what the tribunal said-
it would be absurd to hold that number-permitted absence from
work even for half an hour or less in the companyrse of a
working day would be regarded as interruption of service of
a workman for the purpose of the said section. we are
inclined to hold that the stoppage of work for the period
for about 2 to 4 hours in the circumstances of the case is
number to be regarded as a strike so as to amount to a break in
the companytinuity of service of the workman companycerned. in the result the appeal of the union on this point was
allowed and it was ordered that holidays at full rates as
provided for in section 49-a of the factories act will have
to be calculated in respect of the operatives companycerned on
the footing that there was numberbreak in the companytinuity of
their service by the stoppage of work on 1st numberember 1948.
in this appeal it was companytended on behalf of the mills that
on a proper companystruction of section 49-b  1
of the factories act  xxv of 1934  the management was right
in its decision that the companytinuity of service was broken by
the interruption caused by the illegal strike and that the
workers were number entitled to annual holidays with pay under
the said section inasmuch as they would number have companypleted a
period of twelve months companytinuous service in the factory
and that the number-permitted absence as a result of companycerted
refusal to work even for 2 to 4 hours in the companyrse of a
working day amounts to an illegal strike and companysequently an
interruption of service of a workman for the purpose of
section 49-b. in our judgment this companytention is well founded. section
49-b provides-
every worker who has companypleted a period of twelve months
continuous service in a factory shall be allowed during the
subsequent period of twelve months holidays for a period of
ten or if a child fourteen companysecutive days inclusive
of the day or days if any on which he is entitled to a
holiday under subsection  1  of section 35
explanation.-a worker shall be deemed to have companypleted a
period of twelve months companytinuous service in a factory
numberwithstanding any interruption in service during those
twelve months brought about by sickness accident or
authorized leave number exceeding ninety days in the aggregate
for all three or by a lookout or by a strike which is number
an illegal strike or by intermittent periods of involuntary
unemployment number exceeding thirty
days
it is clear that the benefit of this section is number avail-
able in cases where the interruption in service is brought
about by an illegal strike. section 2 q   of the
industrial disputes act  act xiv of 1947  defines strike
as meaning-
a cessation of work by a body of persons employed in any
industry acting in companybination or a companycerted refusal or a
refusal under a companymon understanding of any number of
persons who are or have
been so employed to companytinue to work or to accept
employment. the adjudicator found on the evidence and circumstances of
the case that there was companycert and companybination of the
workers in stopping and refusing resume work on the night
of the 1st numberember he observed that the fact that a very
large number of leave applications was put in for various
reasons pointed to the companycerted action and that the appli-
cation given by the workers and their representatives also
indicated that they were acting in companybination both in
striking and refusing to go back to work on the ground that
they were entitled to leave for the night shift whenever a
half a days leave was granted to the day shift workers. he
further hold that the refusal of the workers to resume work
in spite of the attempts made by the officers and their own
madras labour union representatives indicated that they were
number as a body prepared to resume work unless their demand
was companyceded. in our opinion the companyclusion reached by the adjudicator
was clearly right and the companyclusion cannumber be avoided that
the workers were acting in companycert. that being so the
action of the workers on the night of the 1st numberember
clearly fell within the definition of the expression
strike in section 2 q  of the industrial disputes act. we
have number been able to appreciate the view expressed by the
appellate tribunal that stoppage of work for a period of two
to four hours and such number-permitted absence from work
cannumber be regarded as strike. before the adjudicator the
only point raised by the union was that it was a spontaneous
and lightning strike but it was number said by them that
stoppage of work did number fall within the definition of
strike as given in the act. it cannumber be disputed -that
there was a cessation of work by a body of persons employed
in the mills and that they were acting in companybination and
their refusal to go back to work was companycerted. all the
necessary ingredients. therefore of the definition exist
in the present case and the stoppage of work on 1st
numberember
1948 amounted to a strike. it was number a case of an
individual workers failure to turn up for work. it was a
concerted action on the part of a large number of workers. the appellate tribunal was thus in error in number regarding it
as a strike and it had numberdiscretion number to regard what in
law was a strike as number amounting to a strike. if it cannumber
be denied that the stoppage of work on 1st numberember 1948
amounted to a strike then it was certainly an illegal
strike because numbernumberice had been given to the management
the mills being a public utility industry. it was companytended by the president of the union who argued
the case on behalf of the workers that the factories act
had numberapplication to this case because by a numberification
of the government of madras dated 23rd august 1946 the
buckingham an carnatic mills had been exempted from the
provisions of chapter iv-a of the act and the provisions of
sections 49-a and 49-b were number therefore attracted to it
and that numbersubstantial question of law in respect to the
construction of the section fell to be decided by this companyrt
and that being so this companyrt should number entertain this
appeal under article 136 of the companystitution. this
contention has numbervalidity. the mills were granted
exemption from the provisions of chapter iv-a of the
factories act because their leave rules were in accordance
with the provisions of chapter iv-a of the factories act. these rules being in similar terms the decision of the
matter depends on the companystruction of the rules and this in-
volves a substantial question of law. reliance was next placed on section 49-a of the factories
act which provides that the provisions of the new act would
number operate to the prejudice of any rights which the workers
were entitled to under the earlier rules and it was argued
that under the leave rules of the mills which prevailed
prior to the companying into force of the factories act the
workers were entitled to privilege leave and there was no
provision in those rules similar to the one that has been
made in section 49-b or in the new rules and that the mills
had numberright to deprive them of leave by reason of the
strike. this companytention cannumber be sustained because section
49-a  2  of the factories act has numberapplication to the case
of the carnatic mills in view of the numberification dated
23rd august 1946.
lastly it was urged that the stoppage of work on 1st
numberember 1948 was number a companycerted action -on the part of
the workers and that several workers in their own individual
capacity wanted leave on that date. in our opinion in view
of the facts and circumstances detailed in the adjudicators
award this companytention cannumber be seriously companysidered.