CASE NO.: Appeal (crl.) 1059 of 1999 PETITIONER: CENTRAL BUREAU OF INVESTIGATION ETC. RESPONDENT: <NAME> AND ANR. DATE OF JUDGMENT: 08/10/1999 BENCH: K.T. THOMAS & <NAME> JUDGMENT:

JUDGMENT 1999 Supp(3) SCR 570 The Judgment of the Court was delivered by <NAME>, <NAME> <NAME> granted.

<ORG> and Haryana has rescued a public servant from bribery offence solely on the ground of want of valid sanction. Evidently the attention of the learned Single Judge of <ORG>, who set aside the conviction and sentence, was not drawn to the intervened changes in law regarding sanction for prosecuting a public servant under Prevention of Corruption enactments. <ORG> (<ORG> for short) and the State of Haryana have filed the special leave petitions in challenge of the aforesaid judgment of <ORG>.

First respondent was the accused in the case. He was working as Section Officer in the office of <ORG>. He was challaned by the <ORG> on the allegation that he demanded and collected an amount of Rs. 200 from a pensioner as reward for disbursing the arrears of pension due to him and that the accused was trapped in the process of receiving the aforesaid amount of bribery on 20.12.1984. After trial the Special Judge, Ambala (Haryana) convicted the accused by its judgment dated 30.8.1990, under Section 161 of the Indian Penal Code and Section 5(2) of the Prevention of Corruption Act, 1947 and sentenced him to undergo rigorous imprisonment for two years besides payment of fine.

Accused preferred an appeal before <ORG> against the aforesaid judgment of conviction and sentence. He contended before <ORG>, inter alia, that he was holding the post of Section Officer (Accounts) on promotion which was ordered by the Controller General of Defence Accounts and hence the competent authority to accord sanction to prosecute the accused is the said Controller General. On its basis it was further contended that the sanction accorded by the Controller of Defence Accounts (Pension and Disbursement), who is a subordinate officer of the Controller General, is invalid.

Learned Single Judge upheld the above contention and on that ground alone set aside the conviction and sentence as per the judgment which is impugned in those appeals.

On behalf of the <ORG> it was submitted before <ORG> that it was never pointed out by the accused to any of the prosecution witnesses that sanction was not granted by the competent officer i.e., Controller General of Defence Accounts. It was also submitted that the question whether the accused was promoted by the Controller General of Defence Accounts or by the Controller of Defence Accounts, are mixed questions of law and facts and therefore at that stage such a plea raised by the accused should not be countenanced.

But the learned Single Judge repelled the aforesaid plea for which he put- forth the following reasons :

"Problem in this case is that the appellant/accused was promoted by the Controller General of Defence Accounts and not by the Controller of Defence Accounts. This aspect, if the appellant has not been able to put before <ORG>, then it does not mean that the appellant/accused is debarred from entertaining the same at this stage because the appeal itself is in continuation of the trial. The plea raised by him is legal and has gone deep to the root of the case of the prosecution. Resultantly, I hold that the sanction Ex.PL has not been granted by a competent authority vitiating the entire case. Learned Special Judge was not competent to take cognizance into the matter as already stated above. Consequently, the present appeal is hereby accepted and the judgment of the conviction and order of sentence passed by the learned Special Judge, <NAME> is hereby set aside." Two factual positions have emerged from the above. First is that the trial court took cognisance of the offence on the strength of the sanction accorded by the Controller of Defence Accounts. Second is that the accused never raised any objection regarding sanction when his case was in the trial court. In such a situation <ORG> ought not to have allowed the accused to raise the contention regarding any defect in the sanction for the first time in appeal, according to the <ORG>.

An endeavour was made before us to show that the sanction ordered by the Controller of Defence Accounts is quite valid and is good enough for prosecuting the accused but we do not think it necessary to consider the merits of that aspect. In these appeals we are only deciding the question whether it was open to the court of appeal to reverse a conviction and sentence passed by the trial court on the mere premise that there was no valid sanction to prosecute. In this connection a reference to Section 465 of the Code of Criminal Procedure is appropriate. It reads thus :

"465. Finding or sentence when reversible by reason of error, omission or irregularity. - (1) Subject to the provisions hereinbefore contained, no finding, sentence or order passed by a Court of competent jurisdiction shall be reversed or altered by a Court of appeal, confirmation or revision on account of any error, omission or irregularity; in the complaint, summons, warrant, proclamation, order, judgment or other proceedings before or during trial or in any inquiry or other proceedings under this Code, or any error, or irregularity in any sanction for the prosecution, unless in the opinion of that Court, a failure of justice has in fact been occasioned thereby.

(2) In determining whether any error, omission or irregularity in any proceeding under this Code, or any error, or irregularity in any sanction for the prosecution has occasioned a failure of justice, the <ORG> shall have regard to the fact whether the objection could and should have been raised at an earlier stage in the proceedings."

(emphasis supplied) A court of appeal or revision is debarred from reversing a finding (or even an order of conviction and sentence) on account of any error or irregularity in the sanction for the prosecution, unless failure of justice had been occasioned on account of such error or irregularity. For determining whether want of valid sanction had in fact occasioned failure of justice the aforesaid sub-section (2) enjoins on the court a duty to consider whether the accused had raised any objection on that score at the trial stage. Even if he had raised any such objection at the early stage it is hardly sufficient to conclude that there was failure of justice. It has to be determined on the facts of each case. But an accused who did not raise it at the trial stage cannot possibly sustain such a plea made for the first time in the appellate court. <CITATION> through <ORG>,  8 SCC 732 this Court has observed in paragraph 29 thus :

"Sub-section (2) of Section 465 of the Code is not a carte blanche for rendering all trials vitiated on the ground of the irregularity of sanction if objection thereto was raised at the first instance itself. The sub- section only says that `the court shall have regard to the fact' that objection has been raised at the earlier stage in the proceedings. It is only one of the considerations to be weighed but it does not mean that if objection was raised at the earlier stage, for that very reason the irregularity in the sanction would spoil the prosecution and transmute the proceedings into a void trial."

In a case where the accused failed to raise the question of valid sanction the trial would normally proceed to its logical end by making judicial scrutiny of the entire materials. If that case ends in conviction there is no question of failure of justice on the mere premise that no valid sanction was accorded for prosecuting the public servant, because the very purpose of providing such a filtering check is to safeguard public servants from frivolous or mala fide or vindictive prosecution on the allegation that they have committed offence in the discharge of their official duties. But once the judicial filtering process is over on completion of the trial the purpose of providing for the initial sanction would bog down to a surplusage. This could be the reason for providing a bridle upon the appellate and revisional forums as envisaged in Section 465 of the Code of Criminal Procedure.

That apart, there is now another trammel on the appellate powers. It must be remembered that the need for a valid sanction for prosecution was incorporated in Section 6 of the Prevention of Corruption Act, 1947 (it will hereinafter be referred to as `the 1947 Act'). The present prosecution was launched under the said Act, but by the time the case reached final stage in the trial court, the 1947 Act was repealed by Prevention of Corruption Act , 1988 (hereinafter referred to as `the 1988 Act') which came into force on 9.9.1988. The prosecution and the trial thereafter continued by virtue of sub-section (2) of Section 30 of the 1988 Act. That section reads thus :

"30. Repeal and saving. - The Prevention of Corruption Act , 1947  and the Criminal Law Amendment Act , 1952  are hereby repealed.

(2) Notwithstanding such repeal, but without prejudice to the application of section 6 of the General Clauses Act, 1897 , anything done or any action taken or purported to have been done or taken under or in pursuance of the Acts so repealed shall, in so far as it is not inconsistent with the provision of this Act, be deemed to have been done or taken under or in pursuance of the corresponding provision of this Act."

Thus repeal of the 1947 Act was made without prejudice to the application of Section 6 of the General Clauses Act which Act reads thus :

"6. Effect of repeal, - Where this Act, or any Central Act or Regulation made after the commencement of this Act, repeals any enactment hitherto made or hereafter to be made, then, unless a different intention appears, the repeal shall not -

(a) revive anything not in force or existing at the time at which the repeal takes effect; or

(b) affect the previous operation of any enactment so repealed or anything duly done or suffered thereunder; or

(c) affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed; or any

(d) affect any penalty, forfeiture or punishment incurred in respect of any offence committed against any enactment so repealed; or

(e) effect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, penalty, forfeiture or punishment as aforesaid, and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed as if the repealing Act or Regulation had not been passed." So "unless a different intention appears" in the 1988 Act the repeal of the 1947 Act will not affect any penal liability incurred or any legal proceedings or remedy in respect of any right acquired under the 1947 Act. However, if a different intention can be discerned from the 1988 Act, such intention will have overriding effect. It is said in sub-section (2) of Section 30 of the 1988 Act that any action taken under or in pursuance of the repealed Act such action will be deemed to have been taken under the corresponding provisions of the new Act.

It is noticeable that no specific provision was incorporated in the 1947 Act regarding appeal and revision and hence the appeal and revision were entirely governed by the provisions of the Code of Criminal Procedure. However, under the 1988 Act there is a special provision regarding appeal and revision which is incorporated in Section 27 . Section 27 is extracted below :

"27. Appeal and revision. - Subject to the provisions of this Act, <ORG> may exercise, so far as they may be applicable, all the powers of appeal and revision conferred by the Code of Criminal Procedure, 1973  on <ORG> as if the court of the special Judge were a court of session trying cases within the local limits of <ORG>." Thus the powers of appeal and revision of <ORG> conferred by the Code of Criminal Procedure shall be "subject to the provisions of the 1988 Act. It is worthwhile to notice that a trammel has been imposed on a court of appeal and revision under Section 19(3)(a) of the 1988 Act. It reads thus : (only material portion is extracted) "Notwithstanding anything contained in the Code of Criminal Procedure 1973 :- no finding, sentence or order passed by a special Judge shall be reversed or altered by a Court in appeal, confirmation or revision on the ground of the absence of or any error, omission or irregularity in. the sanction required under sub-section (1), unless in the opinion of that court, a failure of justice has in fact been occasioned thereby.

Explanation - for the purposes of this Section,

(a) error includes competency of the authority to grant sanction"It is a further inroad into the powers of the appellate court over and above the trammel contained in Section 465 of the Code which has been dealt with supra. Under Section 19(3) (a) no order of conviction and sentence can be reversed or altered by a court of appeal or revision even "on the ground of the absence of sanction" unless in the opinion of that court a failure of justice has been occasioned thereby. By adding the Explanation the said embargo is further widened to the effect that even if the sanction was granted by an authority who was not strictly competent to accord such sanction, then also the appellate as well as revisional courts are debarred from interfering with the conviction and sentence merely on that ground.

Thus the legal position to be followed, while dealing with the appeal filed against the conviction and sentence of any offence mentioned in 1947 Act, is that no such conviction and sentence shall be altered or reversed merely on the ground of absence of sanction, much less on the ground of want of competency of the authority who granted the sanction.

So from any point of view <ORG> committed an error in setting aside the conviction and sentence passed on the accused, on the ground of want of a valid sanction to prosecute. Hence we quash the impugned judgment of <ORG> and remit the matter to <ORG> for disposal afresh of the appeal preferred by the accused before it, in accordance with law. Needless it is to say that the accused will continue to remain on bail till the disposal of the appeal for which purpose the bail bonds executed by him before <ORG> shall stand revived.


<NAME>, J.

1. This appeal is brought by special leave from a judgment of <ORG> at Fort William in Bengal dismissing the appeal of the appellant, <NAME>, from the conviction and sentence passed on him by the Chief Magistrate, Calcutta, on April 10, 1946.

2. The conviction was for an offence under Section 161 of the Indian Penal Code and the sentence was one of twelve months' rigorous imprisonment. It is convenient to set out the charge which was in these terms:

That you <NAME>, on or about the 19th day of September, 1945, in the Town of Calcutta being a public servant to wit, a Railway servant and an inspector in the office of the Regional Controller of Priorities accepted from one <NAME> a gratification other than your legal remuneration to wit, the sum of Rs. 500 only as a motive or reward for showing favour to the said <NAME> in the exercise of your official functions relating to an application by the said <NAME> for being allowed two waggons, one from Allahabad and another from Benares and thereby you the said <NAME> committed an offence punishable under Section 161 of the Indian Penal Code and within my cognizance.

3. The single ground upon which the petition for special leave to appeal was based was that, no sanction for the prosecution of the appellant having been obtained either under Section 270 of the Government of India Act, 1935, or under Section 197 of the Criminal Procedure Code, the Chief Magistrate had no jurisdiction to try or convict him, and it was upon this ground that special leave to appeal was granted, for similar leave had been given in <CITATION> (1948) 50 Bom. L.R. 487, s.c. L.R. 75, I.A. 41, a case then pending, in which the same question (together with other questions) was raised.

4. In January, 1948, this Board heard, and in February, 1948, delivered judgment in <CITATION> , now reported in L.R. 75 I.A. at p. 41. In the course of that judgment their Lordships thought it proper to express their view upon the scope of Section 197 of the Criminal Procedure Code. Having observed that they found it impossible for any relevant purpose to differentiate between Section 270 of the Government of India Act and Section 197 of the Criminal Procedure Code they proceeded as follows (p. 59):

A public servant can only be said to act or to purport to act in the discharge of his official duty, if his act is such as to lie within the scope of his official duty. Thus a Judge neither acts nor purports to act as a Judge in receiving a bribe, though the judgment which he delivers may be such an act: nor does a <ORG> medical officer act or purport to act as a public servant in picking the pocket of a patient whom he is examining, though the examination itself may be such an act. The test may well be, whether the public servant, if challenged, can reasonably claim that what he does, he does in virtue of his office.

5. Applying this reasoning to the case of <NAME>, a public servant, who had been charged together with one, Lahiri, with being a party to a criminal conspiracy to cheat the Government, whereby offences under Section 120B read with Section 420 of the Indian Penal Code were alleged to have been committed, and had also been charged with offences under Section 161 of the Code, their Lordships held that no sanction under Section 197 of the Criminal Procedure Code was necessary.

6. In face of this judgment the present appeal appeared to have little chance of success. It was nevertheless argued fully by counsel and their Lordships have had the opportunity of reconsidering the whole question. They cannot accede to the suggestion of counsel that that part of the judgment which has been cited is to be regarded as obiter dictum. The scope of Section 197 and its applicability to <NAME>'s case were put in the forefront of the written case he presented to the <ORG> and it was the first of his formal reasons that the sanction, for which that section provides, ought to have been, but was not, given. The question was argued at length by the respondent's if not by the appellant's counsel and their Lordships treated it as a matter which required their deliberation and decision. In such circumstances it is irrelevant that a judgment upon other points raised in the case might have rendered such a decision unnecessary.

7. Their Lordships then have before them a decision upon facts which in no material respect differ from those of the present case. Even so, it is, as they recognise, competent for them humbly to tender advise to His Majesty inconsistent with the previous decision, though it can only be in the most exceptional circumstances that such a course should be taken. See Transferred Civil Servants (Ireland) Compensation, In re [1929] A.C. 242 and the cases there cited. Recognising the possibility, they have heard full argument and, having done so, see no reason to doubt the validity of the reasoning or the correctness of the conclusion in <NAME>'s case, and they do not think it necessary to repeat what was said there. Learned counsel for the appellant in the present case laid stress upon what he described as a long line of authority in favour of the view that, where the offence charged is an act which would not be an offence unless committed by a public servant, sanction under Section 197 is necessary. Their Lordships without scrutinising the authorities, which do not appear entirely to support this view, would observe that it is the words of Section 197 as amended in 1923 and nothing else that must be considered, and that they can see no justification for reading the section as if the words "which under the Criminal Procedure Code is an offence only if committed by a public servant" were inserted in the appropriate place. It is neither with all such offences nor only with such offences that Section 197 deals. On the contrary according to its plain words it deals with offences alleged to have been committed by a public servant "while acting or purporting to act in the discharge of his official duty." To these words a meaning was ascribed in <NAME>'s case, to which their Lordships after reconsideration adhere. It has not been disputed that if Section 197 is so construed, no sanction was necessary for the prosecution of the appellant. Their Lordships have therefore humbly advised His Majesty that this appeal must be dismissed.


PETITIONER: <NAME> Vs. RESPONDENT: THE STATE OF MADHYA PRADESH AND OTHE DATE OF JUDGMENT: 16/03/1954 BENCH: <NAME>, MEHAR CHAND (CJ) BENCH: <NAME>, MEHAR CHAND (CJ) MUKHERJEA, B.K. DAS, SUDHI RANJAN BOSE, VIVIAN HASAN, GHULAM CITATION: 1954 AIR 403 1954 SCR 1122 CITATOR INFO : F 1955 SC 661 (5,8,60,123,145) R 1955 SC 765 (5) R 1957 SC 397 (14) R 1957 SC 790 (10) RF 1958 SC 578 (228) RF 1959 SC 725 (10) D 1960 SC 424 (14) RF 1961 SC 65 (5) R 1961 SC1615 (11) R 1962 SC 123 (12) RF 1962 SC1006 (77) R 1962 SC1621 (10,12,39,44,45,46,110) R 1967 SC1401 (8) D 1971 SC2280 (11) F 1975 SC1443 (6) ACT: Constitution of India, arts, 19(1)(g), 226, 286(1)(a)- Central Provinces and Berar Sales Tax Act (Act XXI of 1947), as amended by, Act XVI of 1949-Explanation II to section 2(g)-Whether ultra vires the Constitution-Threat to use coercive machinery of Act for realising tax-whether infringement of fundamental rights under art. 19(1)(g) of the Constitution. HEADNOTE: Held, (i) that explanation II to s. 2(g) of the Central Provinces and Berar Sales Tax Act (Act XXI of 1947) as amended by Central Provinces and Berar Act (Act XVI of 1949) is ultra vires <ORG>. (ii) A threat by the <ORG> to realize tax from the assesses without the authority of law by using the coercive machinery of the impugned Act is a sufficient infringement of his fundamental right under art. 19(1)(g) and gives him a right to seek relief under art. 226 of the Constitution. The impugned Act, requiring the assesses to-deposit the whole of the tax before he can get the relief provided by it, cannot be said to provide an adequate alternative remedy. <CITATION> . ( s C.R. 1069); <CITATION> in council (L.R. 74 I.A. 50); <CITATION> ( S.C.R. 572) referred to. JUDGMENT:

CIVIL APPELLATE JURISDICTION : Civil Appeal No, 20 of 1952. Appeal under article 132(1) of the Constitution of India from the Judgment and Order dated the 25th April, 1952, of <ORG> at Nagp ur in Miscellaneous Petition No. 1623 of 1951.

<NAME> Engineer (<NAME> and <NAME> off, with him) for the appellant.

<NAME>, Advocate-General of Madhya Pradesh, <NAME>, with him) for respondent No. 1.

<NAME>, Advocate-General of Madras (<NAME>, with him) for the intervener.

1954. MArch 16. The Judgment of, the Court was delivered by <NAME> is an appeal by leave from a judgment of <ORG> at Nagpur dated the 25th of April, 1952, dismissing a petition under article 226 of the Constitution of India filed by the appellant questioning the vires of certain provisions of the Central Provinces and Berar Sales Tax Act 1947.

The appellant represents a concern <ORG>, a company registered under' the Indian Companies Act , 1913, having its head office at Bombay, and several branches in . the State of Madhya Pradesh. The main business of the appellant company is that of cotton. The head-office of the appellant at Bombay sells cotton bales to several mills and individuals under the control and the system regulated by the Textile Commissioner at Bombay, and upon a contract of sale being completed the goods after being ginned and pressed are sent from Khamgaon and other places in the State of Madhya Pradesh and are actually delivered in Bombay and such other places outside the State of Madhya Pradesh as directed by the head office. The cotton bales are sent by rail under an insurance in favour of the appellant, and are delivered to the buyer by tender of railway receipt against the payment of price in Bombay. Under the Central Provinces and Berar Sales Tax Act, 1947 (Act I XXI of 1947), cotton was declared liable to sales tax on the 11th of April, 1949, and since that date the appellant commenced paying the tax in respect of the purchases made by it, and continued to pay it till the 31st of December, 1950. For the quarter ending on the 31stof March, 1951, the appellant declined to pay the tax in respect of the purchases made during that quarter, realizing that it could not be made legally liable for the payment of this tax in the State of Madhya, Pradesh, the transactions done or effected in Madhya Pradesh not being " sales" within that State. Apprehending that the company may be subjected to the payment of the tax without authority of law, an application was preferred in <ORG> at Nagpur praying for an appropriate writ or writs which may secure to the company protection from the impugned Act and its enforcement by the State. It was alleged that Explanation II to section 2(g) of the Central Provinces and Berar Sales Tax Act, 1947, as further amended by Act XVI of 1949 was ultra vires and illegal. This petition, along with a refer eence in another case (Miscellaneous Civil Case No. 258 of 1951: A.I.R. 1952 Nag.

378), was heard by a Division Bench of <ORG> and it was held that Explanation II to section 2(g) of the Act was not enforceable because under the Constitution sales tax could only be collected, in the State where the goods were delivered for consumption. It was further held that Explanation 11 as amended by the C.P. & Berar Act XVI of 1949 was not validly enacted because it made drastic changes in the rules of the Sale of Goods Act . Without obtaining the assent of the Governor-General as required by section 107 of the Government of India Act, 1935. 'It was observed that the mere p reduction of the goods in a State is not enough to make the tax payable unless the goods are appropriated to a particular contract, and that to impose the tax at that stage would be tantamount to charging an excise duty and not a tax on the sale of goods. In spite of these findings <ORG> declined to issue a writ and dismissed. the petition made to it under article 226 of the Constitution on the ground that a mandamus issues only to compel an authority to do or abstain from doing some act, that it is seldom anticipatory and certainly never issues where the action of the authority is dependant on some action of the petitioner and that in the present case the petitioner had not even made his return and no demand for the tax could be made from him.

In this appeal it was argued, by <NAME>, learned counsel for the appellant, that an illegal and unjust imposition operates as an illegal restraint on trade and violates fundamental rights, that <ORG> having held that the Constitution by article 286 thereof made delivery of the goods for consumption the decisive factor for determining which State should have the right of taxing such sales, and having thus found the provision of the Explanation to the definition of "sale" unconstitutional, should have issued a writ of mandamus restraining the respondent State from enforcing that part of the Act.

To appreciate the contentions of the learned counsel it is necessary to set out the relevant provisions of the Act which, <ORG> has declared ultra vires <ORG>. Act XXI of 1947 defines the expression "sale" in section 2(g) of the Act in these terms:- " 'Sale' with all its grammatical variations and cognate expressions means any transfer of property in goods for cash or deferred payments or other valuable consideration including transfer of property in goods made in the course of the execution of a contract, but does not include a mortgage, hypothecation, charge or pledge ". " Explanation.(I)-" A transfer of goods on hirepurchase or other instalment system of payment shall, notwithstanding that the seller retains a title to any goods as security for payment of the price, be deemed to be a sale. "

Explanation (II)-" Notwithstanding anything to the contrary in the Indian Sale of Goods Act , 1930, the sale of any goods which are actually in the Central Provinces and Berar at the time when the contract of sale as defined in that Act in respect thereof is made, shall, wherever the said contract of sale is made, be deemed for the purpose of this Act to have taken place in the Central Provinces and Berar. "

This provision was amended by the Central Provinces and Berar Act XVI of 1949 which came into force on the 11th of ApriL 1949, by which Explanation II of section 2(g) was amended as follows:-

Explanation (II)-,' Notwithstanding anything to the contrary in the Indian Sale of Goods Act , 1930, the sale or purchase of any goods shall be deemed for the purposes of this Act, to have taken place in this Province-wherever the contract of sale or purchase might have been made

(a) If the goods were actually in this Province at the time when the contract of sale or purchase in respect thereof was made, or

(b) In case, the contract was for the sale or purchase of future goods by description, then, if the goods are actually produced or found in this Province at any time after the contract of sale or purchase in respect 'thereof was made. "

Certain amendments were made in the Act, by Act IV of 1951 which came into force on the 1st of April. 1951, but these are not relevant to the present' inquiry. As pointed out above, <ORG> held that the new Explanation II was ultra vires <ORG> and that the mere production of goods was not enough to make the tax payable unless the goods were appropriated to a particular contract. The correctness of this view can no longer be questioned by reason of the majority decision of this court in <CITATION> .(1), wherein it was held that article 286(1) (a) of the Constitution read with the Explanation thereto and construed in the light of article 301 and article 304 prohibits the taxation of sales or purchases involving inter-State elements, by all States except the State in which the goods are delivered for the purpose of consumption therein and that the view that the Explanation does not deprive the State, in which the property in the goods passed, of its taxing power and that consequently both the State in which the property in the goods passes and the State i n which the goods are delivered for consumption have the power to tax, is not correct.

The learned Advocate-General of the <ORG> did not in this situation, and very properly, challenge the correctness of the decision of <ORG> on this point, and conceded that the Explanation was clearly ultra vires the <ORG> Legislature. He however contended that on the principle enunciated by the Privy (1) [1953] S.C.R. 1069.

<ORG> in <CITATION> in <ORG>(1), jurisdiction to question assessment otherwise than by use of the machinery expressly provided by the Act, was inconsistent with the statutory obligation to pay, arising by virtue of the assessment and that the liability to pay the sales tax under the Act is a special liability created by the Act itself which at the same time gives a special and particular remedy which ought to be resorted to, and therefore the remedy by a writ ought not to be allowed to be used for evading the provisions of the Act, especially a fiscal Act. It was also said that the con- ditions requisite for the issue of a writ of mandamus were not present in the case and that it was not within the scope and purpose of article 226 of the Constitution to decide an academic question.

In our opinion, the contentions raised by the learned Advocate-General are not well founded. It is plain that the State evinced an intention that it could certainly proceed to apply the penal provisions of the Act against the appellant if it failed to make the return or to meet the demand and in order to escape from such serious consequences threatened without authority of law, and infringing fundamental rights, relief by way of a writ of mandamus was clearly the appropriate relief. <CITATION> (2), it was held by this court that a licence fee on a business not only takes away the property of the licensee but also operates as a, restriction on his fundamental right to carry on his business and therefore if the imposition of a licence fee is without authority of law it can be challenged by way of an application under article 32 , a fortiori also, under article 226. These observations have apposite application to the circumstances of the present case. Explanation II to section 2(g) of the Act having been declared ultra vires, any imposition of sales tax on the appellant in Madhya Pradesh is without the authority of law,, and that being so a threat by the State by using the coercive machinery of the impugned Act to (1) 74 I.A. 5o.

(2) [1952] S.C.R. 572, I46 realize it from the appellant is a sufficient infringement of his fundamental right under article 19(1) (g) and it was clearly entitled to relief under article 226 of the Constitution. The contention that because a remedy under the impugned Act was available to the appellant it was disentitled to relief under article 226 stands negatived by the decision of this court in <CITATION> .(1), above referred to. There it was held that the principle that a court will not issue a prerogative writ when an adequate alternative remedy was available could not apply where a party came to the court with an allegation that his fundamental right had been infringed and sought relief under article 226. Moreover, the remedy provided by the Act is of an onerous and burdensome character. Before the appellant can avail of it he has to deposit the whole amount of the tax. Such a provision can hardly be described as an adequate alternative remedy.

For the reasons given above, we are of the opinion that <ORG>, having held that the Explanation II to section 2(g) of the Act was ultra vires, was in error in dismissing the application on the ground that it was not entitled to relief under the provisions of article 226 of the Constitution. In the result therefore we &How this appeal with costs and direct an appropriate writ to issue restraining the first respondent from imposing or authorising imposition of a tax on the appellant in exercise of its authority under Explanation 11 held void.

Appeal allowed.

(I) [1953] S.C.R. 1069.


JUDGMENT <NAME>, C.J.

1. The significant question to be decided in this writ petition is whether the provisions of Industrial Disputes Act , 1947 have application to newspaper employees other than working journalists. This question has arisen on these facts. The petitioner was initially appointed as a stringer at Puri by opp. party No. 1, General Manager, <ORG>, on a consolidated honorarium of Rs, 40/-per month. This was in. 1973. After completion of the probationary period, he was confirmed in service. Thereafter his name was included in the mailing list as District Correspondent. Having been treated as a Correspondent/his ''honorarium was raised to Rs. 75/- per month. He continued to discharge this function. ln the meantime, <ORG> was constituted under the Working Journalists (Conditions of Service) and Miscellaneous Provisions Act , 1955 (hereinafter referred to as the. " Working Journalists Act ") to fix wages in respect of working journalists. The <ORG> gave its award on 12-8-1980. The case of the petitioner is that on the basis of the said award he became entitled to higher wages and accordingly, he sent representations to his employer who did not respond. Suddenly/by a letter dated 25-8-1983, the service of the petitioner was terminated with effect from 15-9-1983:

2. An industrial dispute was raised relating to the termination of the petitioner's service on the ground that the same amounted to retrenchment but was ordered without complying with the requirements of Section 25-F of the Industrial Disputes Act, 1947. The dispute was referred for adjudication by <ORG>. A preliminary objection was raised relating to main- tainability of the reference on the ground that the petitioner was not a working journalist and as such not a 'workman' as defined by Section 2(s) of the Industrial Disputes Act, The learned <ORG> has held that the reference is not maintainable and has answered' the reference accordingly. Feeling aggrieved, the petitioner has approached this Court.

3. A perusal of the impugned award shows that the petitioner was not regarded as a working journalist as he was a part-time correspondent, because of which it was held that the same was not his principal avocation. It was then opined that as the petitioner was not a working journalist, he could not be regarded as a 'workman' under the Industrial Disputes Act .

4. In assailing the view taken by <ORG>, <NAME> con- tends that to be a working journalist, it is not necessary that the principal avocation of a correspondent must be that of a journalist. To appreciate the contention of the learned counsel, we have to know the definition of "working journalist" given in Section 2(f) of the Working journalists Act, which reads as below :

"2. Definitions-In this Act, unless the context otherwise requires, (a) to (e) XX XX XX XX

(f) "working journalist" means a person whose principal avocation is that of a journalist and who is employed as such in,or in relation to, any newspaper establishment and includes an editor, a leader- writer, news-editor, sub-editor, feature-writer, copy-tester, reporter correspondent, cartoonist, news-photographer and proof- reader but does not include any such person who

(i) is employed mainly in a managerial or administrative capacity, or

(ii) being employed in a supervisory capacity, performs, either by the nature of the duties attached to his office or by reason of the powers vested in him, functions mainly of a managerial nature;"

5. By referring to the aforesaid definition, it is contended that as mention about 'correspondent' has been made in the inclusive part of the definition, the first part would not be required to be satisfied qua him. <ORG>, however took the contrary view placing reliance on <CITATION> , 1963(2) LLJ 385 : AIR 1964 SC 279. A reading of this decision would no doubt support the view taken by <ORG>. According to this decision, the categories of persons mentioned in the inclusive part of the definition only remove the doubt as to whether the persons specified in the said clause are journalists or not. But then, to claim the status of 'working journalists', they will have to further show that journalism is their principal avocation

6. Despite the above undisputed position, <NAME> contends that a later decision of <ORG> in <CITATION> , AIR 1972 SC 872, would show that for a person in the inclusive category, the requirement that his principal avocation must be that of a journalist would not apply. In this connection, the following observation finding place in paragraph 13 of the judgment, wherein the aforesaid decision in Somayajulu was noted, is pressed into service :

"It is a matter of considerable doubt whether one of the conditions to be satisfied as laid down by this Court that he must be a person whose principal avocation is that of a journalist when interpreting the inclusive part of the definition as contained in Section 2(f) of the Act will still apply."

Despite this, we would be hesitant to hold that the first part of the definition is not required to be satisfied for those categories of persons who come in the inclusive cause for two reasons : First in the above-noted portion of the judgment, only a doubt has been expressed on the proposition which had found favour with the <ORG> in Somayajulu. There is no decision on this point. Secondly, the <ORG> in <NAME> case was considering the question whether a calligraphist would not be regarded as a working journalist' if his principal avocation would not be journalism even though <ORG> had defined a "calligraphist" as coming within the definition of a 'working journalist'. We do not have before us any decision of any authority like <ORG> to state that a correspondent would be a 'working journalist' even if his principal avocation not be that of a journalist.

7. The aforesaid, however, is not the end of the journey inasmuch as <NAME> next contention is that even if the petitioner be not a working journalist, he could still be a 'workman' under the provisions of the Industrial Disputes Act . As to this contention, the reply of <NAME> appearing for opp. party No. 1 is that the provisions of the Industrial Disputes Act would apply only to working journalists and to no other categories of newspaper employees. This submission is advanced on the basis of what has been provided in Section 3 of the Working journalists Act, which is in the following language :

"3. Act 14 of 1947 to apply to working journalists__ (1) The provisions of the Industrial Disputes Act , 19 '7, as in force for the time being, shall, subject to the modification specified in Sub- Section (2), apply to, or in relation to, working journalists as they apply to, or in relation to, workmen within the meaning of that Act.

(2) Section 25-F of the aforesaid Act, in its application to working journalists, shall be construed as if in Clause (a) thereof, for the period of notice referred to therein in relation to the retrenchment of a workman, the following periods of notice in relation to the retrenchment of a working journalist had been substituted, namely_

(a) six months in the case of an editor, and

(b) three months, in the case of any other working journalist."

It would also be apposite in this connection to note the definition of 'news- paper employee'as given in Section 2(c) of the Act which reads as below;

" 'newspaper, employee' means any working journalist, and includes any other person employed to do any work in, or in relation to, any newspaper establishment; "

8. It is further contended by the learned counsel that in so far as other newspaper employees are concerned, provisions have been made in Secs. 4 and 15 of the Working Journalists Act regarding application of the Industrial Employment (Standing Orders) Act , 1946 and the Employees' Provident Funds Act , 1952. Our attention is also invited in this connection by <NAME> to Section 17(2) of the Working Journalists Act which has stated that if any question arises as to the amount due under this Act to a newspaper employee from his employer, <ORG> may refer the question to <ORG> constituted by it under the Industrial Disputes Act and the said Act shall have effect in relation to <ORG> as if the question so referred were a matter referred to that Court for adjudication under that Act.

9. Let us note these provisions :

"14. Act 20 of 1946 to apply to newspaper establishments_ The provisions of the Industrial Employment (Standing Orders) Act , 1946, as in force for the time being, shall apply to every newspaper establishment wherein twenty or more newspaper employees are employed or were employed on any day of the preceding twelve months as if such newspaper establishment were an Industrial establishment to which the aforesaid Act has been applied by a notification under Sub-section (3) of Section 1 thereof, and as if a newspaper employee were a workman within the meaning of that Act."

"15. Act 19 of 1952 to apply to newspaper establishments-

The Employees' Provident Funds Act , 1952, as in force for the time being, shall apply to every newspaper establishment in which twenty or more persons are employed on any day, as if such news- paper establishment were a factory to which the aforesaid Act had been applied by a notification of <ORG> under Sub-sec, (3) of Section 1 thereof, and as if a newspaper employee were an employee within the meaning of that Act."

"17. Recovery of money due from an employer.__ (1) Where any amount is due under this Act to a newspaper employee from an employer, the newspaper employee himself, or any person authorised by him in writing in this behalf, or in the case of the death of the employee, any member of his family may, without prejudice to any other mode of recovery, make an application to <ORG> for the recovery of the amount due to him, and if <ORG>, or such authority as <ORG> may specify in this behalf, is satisfied that any amount is so due, it shall issue a certificate for that amount to the Collector, and the Collector shall proceed to recover that amount in the same manner as an arrear of land revenue.

(2) If any question arises as to the amount due under this Act to a newspaper employee from his employer, <ORG> may, on its own motion or upon application made to it, refer the question to <ORG> constituted by it under the Industrial Disputes Act , 1947 or under any corresponding law relating to investigation and settlement of industrial disputes in force in the State and the said Act or law shall have effect in relation to <ORG> as if the question so referred were a matter referred to <ORG> for adjudication under that Act or law."

10. Relying on these provisions, it is urged that in so far as newspaper employees other than working journalists are concerned, they can take advantage of the provisions of the Industrial Employment (Standing Orders) Act ., 1946 or the Employees' Provident Funds Act , 1952, or, if they have a grievance about any amount due to them from their employer. they may apply to <ORG> for referring the question to <ORG> for adjudication It, therefore, follows, according to the learned counsel, that a newspaper employee other than a working journalist would not be a 'workman' under the Industrial Disputes Act and he cannot take advantage of the provisions of that Act.

11. We have duly considered the aforesaid submission of <NAME> and, according to us, it would be difficult to say that the benefit of the Industrial Disputes Act would not be available to newspaper employees other than working journalists even if they be workmen within the meaning of that Act. As to Section 3(1) of the Working Journalists Act, we would say that the provision in that section making the Industrial Disputes Act applicable to working journalists cannot be taken to be that the said Act would not apply to other newspaper employees. Section 3(1) might have been enacted to make it abundantly clear that the Industrial Disputes Act would apply to working journalists even if they may not satisfy the definition of 'workman' as given in the Industrial Disputes Act . It is worth poinhng out in this connection that a working journalist as defined in Section 2(f) of the Working Journalists Act may not be a 'workman' if the definition of that expression as given in the Industrial Disputes Act were to apply to him. The legislature, however, wanted the benefits of the Industrial Disputes Act to be made available to working journalists and it is perhaps because of this that Section 3(1) was inserted in the Act. This apart, reference to Section 3(1) shows that certain modifications were made in the provisions of the Industrial Disputes Act in their application to working journalists. We do nor think if we would be justified in denying the benefits of a statute as important as the Industrial Disputes Act to other categories of newspaper employees, if otherwise they be workmen within the meaning of that Act, because of what has been provided in Section 3(1) of the Working Journalists Act.

12. As to the application of the two specific Acts to newspaper employees because of what has been provided in Secs, 14 and 15 of the Working Journalists Act , we would say that these two sections were enacted to make the two Acts in question applicable to newspaper establishments because de hors these provisions, those Acts might not have applied to such establishments. The legislature, however, wanted to give the benefit of those Acts to all newspaper employees. It may be pointed out that Secs. 14 and 15 have referred to the application of the two Acts in question to "every newspaper establishment" and not to "newspaper employees". Of course, by making these two Acts applicable to all newspaper establishments, the benefits of the same were conferred on all newspaper employees. This does not mean that the legislature wanted to rob the newspaper employees of the benefits of other Acts. According to us, no such conclusion can be drawn on the basis of what has been provided in Secs. 14 and 15 of the Working Journalists Act .

13. What has been provided in Section 17(2) of the Working Journalists Act is also an additional benefit made available to a newspaper employee, because, but for this provision, it would not have been open to a newspaper employee to get his matter relating to any amount due under the Act referred for adjudication by <ORG>. It is known that the provision finding place in Section 33-C(2) of the industrial Disputes Act does not permit <ORG> to enter into disputed questions relating to any amount due to an employee from his employer, as that provision is mainly related to computation of the amount due, rather than adjudication of the entitlement to the amount due. So, but for what is stated in Section 17(2) of the Working journalists Act, a newspaper employee could not have got his matter relating to entitlement of any amount due from his employer adjudicated by <ORG>.

14. Though <NAME> has referred in this connection to Section 25-J of the Industrial Disputes Act, that section is not relevant to decide the controversy at hand, as what is laid down therein is that the provisions of Chapter V-A of that Act shall have effect notwithstandig anything inconsistent therewith contained in any other law. But for the provisions of Chapter V-A to apply, the Act itself must be first applicable, which Would be so if the concerned employee be a 'workman'. To this, answer has to be found from provisions other than those finding place in Chapter- V-A of the aforesaid Act.

15. However, in view of what is stated above, we would reject the contention advanced by <NAME> and hold that the provisions of the Industrial Disputes Act would not cease to apply to a newspaper employee if he be otherwise covered by the provisions of that Act which would be so if he would be a 'workman' as defined in Section 2(s) of that Act.

16. <NAME> has something to say on this aspect of the matter also. According to him, the petitioner could not be regarded as a 'workman' within the definition of Section 2(s) of the Industrial Disputes Act inasmuch as there is nothing to show if opp. party No. 1 was exercising any control and supervision over the work of the petitioner. It is submitted that the relationship of employer and employee would not exist between the parties unless one be in a position to control and supervise the work of the other For the disposal of this case, we would agree with <NAME> that for the relationship of an employer and his employee to come into existence; it should be shown that the employer was in a position to control and supervise the work of the employee. This is the view expressed in <CITATION> , AIR. 1957 SC 264, which was cited with approval in <CITATION> , AIR 1938 SC 388. It may, however, be pointed out that there is no rigid test to determine the question of 'control and supervision". The answer in every case would ultimately turn on its own circumstances.

17. In the case at hand, there is no application of mind by <ORG> to the aforesaid aspect of the matter though it has been observed in the impugned award that the management never exercised any control over the work of the petitioner. This is, however, half-hearted observation. Having come to the conclusion that the petitioner being not a working journalist, it was not available to him to contend that he was a 'workman' under the Industrial Disputes Act , <ORG> did not really apply its full mind to the question as to whether the petitioner would not be a "workman' as defined in Section 2(s) of the Industrial Disputes Act because of lack of control and supervision exercised by opp. party No. 1. 1t is urged by <NAME>, by referring to <CITATION> . 1980 FLR 348, that if there would be no control over a correspondent, he cannot be called an employee. Though this is so, but every case would depend on its own facts. In the case at hand, there is very scanty treatment of this subject. The entire matter has been disposed of in two sentences. Parties were not called upon to substantiate their cases on this aspect. We would, therefore, desire a proper adjudication of this point.

18. In view of what is stated above, we set aside the impugned award and remit the matter back to <ORG> for fresh disposal in the light of the observations made above. While taking up the matter afresh, <ORG> would allow the parties to lead evidence on the question of maintainability as well as on merits. Further, the (earned Court would not merely decide the preliminary point relating to the maintainability of the reference but would also enter into the merits of the controversy. We have given this direction keeping in view the decision of <ORG> in <CITATION> , AIR 1984 SC 153 in which it was held that Tribunals entrusted with the task of adjudicating labour disputes, where delay may lead to misery, should decide all issues in dispute at the same time without trying some of them as preliminary issues.

19. The petition is allowed accordingly. We however, make no order as to costs.

<NAME>, J.

20. I agree.


PETITIONER: GENERAL MANAGER, SECURITY PAPER MILL, <NAME> Vs. RESPONDENT: R.S. SHARMA & ORS. DATE OF JUDGMENT14/02/1986 BENCH: VENKATARAMIAH, E.S. (J) BENCH: VENKATARAMIAH, <NAME>, M.P. (J) CITATION: 1986 AIR 954 1986 SCR (1) 281 1986 SCC (2) 151 1986 SCALE (1)231 ACT: Industrial Disputes Act , 1947 section 2(p) - "Settlement", meaning of - Settlement arrived at by agreement between the employer and workman otherwise than in the course of conciliation proceedings, whom it binds, explained - Burden of Proof that a "Settlement" arrived at by agreement between the employer and the workman binds every workman being parties to the settlement and that the agreement was fair and just, is upon the employer. HEADNOTE: In the course of conciliation proceedings under the provisions of the Industrial Disputes Act , 1947, a settlement was arrived at on June 29, 1973 between the management of <ORG>, Hoshangabad, the appellant and <ORG>, Hoshangabad. One of the terms of the settlement related to the incentive benefit entered into on behalf of the workmen and other non- operative officers and staff of <ORG> at Hoshangabad. When the above Settlement was in force <ORG> by its letter dated December 29, 1975 reduced the rate of group incentive benefit payable by restricting the entitlements of the non-operative officers and staff with effect from 1.1.76 to 25% of the rate applicable to industrial workmen for gazetted officers and to 50% in respect of non-gazetted industrial staff. When the said order was challenged, <ORG> held that the modification of the incentive benefit made by <ORG> was illegal. After that the management entered into an agreement with one of the trade unions named <ORG> on April 11, 1979 reducing the rate of incentive benefit to 50% to the non-operative employees that is administrative staff, accounts staff, and paid the benefit accordingly. The said agreement was not entered into during the course of any 282 conciliation proceedings and in fact there were no conciliation proceedings pending at the time when the agreement was entered into. The respondents who belonged to the non-operative staff and who were not the members of the <ORG> and parties to the agreement challenged the validity of the agreement before the <ORG> under the Payment of Wages Act on the basis of the Settlement of the year 1973. While allowing the claim for Rs. 1,93,357.85 and cost at the rate of Rs. 10 per worker, it did not, however, allow any compensation. In appeal, <ORG> affirmed the decision of the authority under the Payment of Wages Act but disallowed the costs at the rate of Rs. 10 per worker. Hence the appeal by special leave by the management alone. Dismissing the appeal, the <ORG>, ^ HELD: 1. The expression "settlement" defined in section 2(p) of the Industrial Disputes Act, 1947 means a settlement arrived at in the course of conciliation proceeding and also includes a written agreement between employer and workmen arrived at otherwise than in conciliation proceeding where such agreement has been signed by the parties thereto in such manner as may be prescribed and a copy thereof has been sent to an officer authorised in this behalf by the appropriate <ORG> and the Conciliation Officer. [286 G- H; 287 A] A distinction is made in the Industrial Disputes Act , 1947 between a settlement arrived at in the course of conciliation proceeding and a settlement arrived at by agreement between the employer and workman otherwise than in conciliation proceeding both as regards the procedure to be followed in the cases and as regards the persons on whom they are binding. If a settlement of the dispute or of any of the matters in dispute is arrived at in the course of the conciliation proceeding the Conciliation Officer shall send a report thereof to the appropriate <ORG> or an officer authorised in that behalf by the appropriate <ORG> together with a Memorandum of Settlement signed by the parties. Even though a Conciliation Officer is not competent to adjudicate upon the disputes between the management and its workmen he is expected to assist them to arrive at a fair and just settlement. He has to play the role of an adviser and friend of both the parties and should see that neither party takes undue 283 advantage of the situation. Any settlement arrived at should be a just and fair one. It is on account of this special feature of the settlement sub- section 3 of section 18 of the Industrial Disputes Act, 1947 provides that a settlement arrived at in the course of conciliation proceedings under that Act shall be binding on (i) all parties to the industrial dispute, (ii) where a party referred to in clause (i) is an employer, his heirs, successors, or assigns in respect of the establishment to which the dispute relates and (iii) where a party referred to in clause (i) is comprised of workmen, all persons who were employed in the establishment of part. Law thus attaches importance and sanctity to a settlement arrived at in the course of a conciliation proceeding since it carries a presumption that it is just and fair and makes it binding on all the parties as well as the other workmen in the establishment or the part of it to which it relates. But in the case of a settlement not arrived at in the course of the conciliation proceedings it has to be in writing and signed by the parties in the prescribed manner and a copy thereof should be sent to the officer authorised by the appropriate government in this behalf and to the Conciliation Officer. Such a settlement arrived at by agreement between the employer and workmen otherwise than in the course of conciliation proceedings is binding only on the parties to the agreement as provided in section 18(1) of the Industrial Disputes Act, 1947. Such a settlement is not binding on the other workmen who are not parties to the settlement. [287 A- H; 288 A-D] In the instant case, the agreement entered into on April 11, 1979 between the Management and <ORG> is not binding on the respondents and therefore, cannot have the effect of depriving them of their right under the settlement dated June 29, 1983 as long as it is in operation since, (a) it is not shown that <ORG> which had entered into an agreement could represent the respondents and that the respondents were parties to it; (b) no plea of termination or bringing to an end in some manner known to law of the earlier agreement under section 19(2) was taken by the management; and (c) apart from the bare assertion that the agreement dated April 11, 1979 reducing the incentive benefit was fair and just and therefore it should not be interferred with, no material was placed by the management before the <ORG> under the Payment of Wages Act or <ORG> to show that the said agreement was fair and just. [288 E; 289 A-B] 284 JUDGMENT:

CIVIL APPELIATE JURISDICTION : Civil Appeal No. 2696 (NL) of 1984.

From the Judgment and Order dated 10.11.1983 of <ORG> in Appeal No. 25/PWA of 1981.

<NAME> for the Appellant.

<NAME> for the Respondents.

The Judgment of the Court was delivered by <NAME>, J. This appeal by special leave is filed against the judgment and order dated November 10, 1983 passed by <ORG>, Madhya Pradesh at Indore in Appeal No. 25/PWA/81 modifying the order dated April 29, 1981 passed by the <ORG> under the Payment of Wages Act (<ORG>), Bhopal in case No. 1/PWA/81. The facts of the case are briefly these in the course of conciliation proceedings under the provision of the Industrial Disputes Act , 1947 a settlement was arrived at on June 29, 1973 between the management of <ORG>, Hoshangabad, the appellant herein, and <ORG>, Hoshangabad. In the Memorandum of Settlement arrived at as per section 12(3) of that Act one of the terms related to the incentive benefit. Clause 2(c) and (d) of the Memorandum of Settlement which relates to incentive benefit reads as follows :

"2.(c) The settlement on revised group incentive base of 6 M.T. a day will be treated as ad hoc regardless of merits of the case and will remain close and localised to S.P.M. and will not serve as precedent for norms of production in other departmental industrial undertakings.

(d) The revised base of 6 M.T. a day and the existing norms of the processing sections will be temporary and remain valid till Government take final decision on the basis of the revision and recommendations of <ORG> set up under letter No.F8(6)/73 Cy dated 5th April, 1973."

The above settlement was entered into on behalf of all the workmen and other non-operative officers and staff of <ORG> at Hoshangabad. When the above Settlement was in force <ORG> by its letter dated December 29, 1975 reduced the rate of incentive benefit payable by ordering that the entitlements of the non-operative officers and staff to the group incentive benefit shall be as under :

(i) All Gazetted Officers incharge of non- operative Section (like Administrative and Chief Accounts Officers, Accounts Officers, Medical Officer and Junior Medical Officer) will be entitled to Group Incentive at 25 per cent of the rate applicable to industrial workmen.

(ii) All non-gazetted non-industrial staff and supervisor officers in non-operative section such as office (Accounts, Establishment, Administration and General Sections), Dispensary, Estate etc. will be entitled to group Incentive at 50 per cent of the rate applicable to industrial workmen.

It was directed that the above order dated December 29, 1975 would be effective on the incentives to be drawn from January 1, 1976. The above order dated December 29, 1975 was challenged before <ORG> and that authority held that the modification of the incentive benefit made by <ORG> was illegal. After that the management entered into an agreement with one of the trade unions named <ORG> on April 11, 1979 reducing the rate of incentive benefit to 50 per cent to the non-operative employees i.e. administrative staff, accounts staff, estate employees and dispensary staff. After that the appellant paid the benefit at the reduced rates as per that agreement to the non-operative employees. The said agreement was not entered into during the course of any conciliation proceedings and in fact there were no conciliation proceedings pending at the time when the agreement was entered into. The respondents who were the non-operative staff and were not the members of the <ORG> and parties to the agreement challenged the validity of the agreement before the <ORG> under the payment of Wages Act on the basis of the Settlement of the year 1973. The claim before that <ORG> was in respect of the period between May 1, 1979 to April 30, 1980 and the total amount claimed was Rs.1,93,357.85. The management filed a statement of objections before the <ORG> under the payment of Wages Act stating that the <ORG> was the representative <ORG> and the agreement entered into by that <ORG> was binding on all the workers including the respondents. The <ORG> under the Payment of Wages Act recorded the evidence and thereafter allowed the claim of the respondents regarding deducted wages of Rs.1,93,357.85. It did not, however, allow any compensation but allowed the costs at the rate of Rs.10 per worker. Aggrieved by the order of the <ORG> under the Payment of Wages Act , the management preferred an appeal to <ORG>, Indore. Before <ORG> the management raised several contentions. <ORG> affirmed the decision of the <ORG> under the Payment of Wages Act but disallowed the costs at the rate of Rs.10 per worker which had been awarded by the <ORG> under the Payment of Wages Act after rejecting all other contentions. This appeal by special leave is filed against the decision of <ORG>.

The only point urged before us by the management in this appeal is that <ORG> which had entered into the agreement dated April 11, 1979 was entitled to represent all the workers including the respondents herein and it was binding on the respondents (who were neither members of the said <ORG> nor parties to the agreement) also. On behalf of the respondents it is pleaded that they were not members of the said <ORG> and an agreement not entered into in the course of the conciliation proceedings had not the effect of taking away their rights under the Settlement arrived at in the year 1973. It is also contended that the said <ORG> had no authority to enter into an agreement binding the respondents who were not its members.

The expression 'settlement' is defined in section 2(p) of the Industrial Disputes Act, 1947. It means a settlement arrived at in the course of conciliation proceeding and also includes a written agreement between employer and workmen arrived at otherwise than in conciliation proceeding where such agreement has been signed by the parties thereto in such manner as may be prescribed and a copy thereof has been sent to an officer authorised in this behalf by the appropriate <ORG>. and the Conciliation Officer. A distinction is made in the Industrial Disputes Act , 1947 between a settlement arrived at in the course of conciliation proceeding and a settlement arrived at by agreement between the employer and workmen otherwise than in conciliation proceeding both as regards the procedure to be followed in the two cases and as regards the persons on whom they are binding. Section 12 of the Industrial Disputes Act, 1947 lays down the duties of Conciliation Officer. Under sub-section (1) of section 12 where any industrial dispute exists or is apprehended, the Conciliation Officer is required to hold conciliation proceedings in the prescribed manner. By sub-section (2) thereof he is charged with the duty of promptly investigating the dispute and all matters affecting the merits and the right settlement thereof for the purpose of bringing about the settlement of the dispute and he is required to do all necessary things as he thinks fit for the purpose of inducing the parties to come to a fair and amicable settlement of the dispute. If a settlement of the dispute or of any of the matters in dispute is arrived at in the course of the conciliation proceedings the conciliation Officer shall send a report thereof to the appropriate <ORG> or an officerauthorised in that behalf by the appropriate <ORG> together with a Memorandum of Settlement signed by the parties. Even though a Conciliation Officer is not competent to adjudicate upon the disputes between the management and its workmen he is expected to assist them to arrive at a fair and just settlement. He has to play the role of an adviser and friend of both the parties and should see that neither party takes undue advantage of the situation. Any settlement arrived at should be a just and fair one. It is on account of this special feature of the settlement sub-section (3) of section 18 of the Industrial Disputes Act, 1947 provides that a settlement arrived at in the course of conciliation proceeding under that Act shall be binding on (i) all parties to the industrial dispute, (ii) where a party referred to in clause

(i) is an employer, his heirs, successors, or assigns in respect of the establishment to which the dispute relates and (iii) where a party referred to in clause (i) is comprised of workmen, all persons who were employed in the establishment or part of the establishment as the case may be to which the dispute relates on the date of the dispute and all persons who subsequently become employed in that establishment or part. Law thus attaches importance and sanctity to a settlement arrived at in the course of a conciliation proceeding since it carries a presumption that it is just and fair and makes it binding on all the parties as well as the other workmen in the establishment or the part of it to which it relates as stated above. But in the case of a settlement not arrived at in the course of the conciliation proceeding it has to be in writing and signed by the parties in the prescribed manner and a copy thereof should be sent to the officer authorised by the appropriate <ORG> in this behalf and to the conciliation Officer. Such a settlement arrived at by agreement between the employer and workmen otherwise than in the course of conciliation proceedings in binding only on the parties to the agreement as provided in section 18(1) of the Industrial Disputes Act, 1947. Such a settlement is not binding on the other workmen who are not parties to the settlement.

It is seen from the material placed before us that there were three Unions and there was no evidence to show that the respondents were the members of <ORG> which had entered into the agreement dated April 11, 1979. Since it is not shown that <ORG> which had entered into the agreement could represent the respondents herein and that the respondents were parties to it, the agreement was not binding on them.

The settlement arrived at in the course of conciliation proceeding on June 29, 1973 which was binding on the appellant and the respondents herein would remain in operation until it is terminated or brought to an end in some manner known to law. Section 19(2) of the Industrial Disputes Act, 1947 provides that a settlement shall be binding on the persons on whom it is binding for such period as is agreed upon by the parties and if no such period is agreed upon for a period of six months from the date on which the memorandum of settlement is signed by the parties to the dispute and shall continue to be binding on the parties after the expiry of the period aforesaid until the expiry of two months from the date on which a notice in writing of an intention to terminate the settlement is given by one of the parties to the other party or parties to the settlement. No notice given under section 19(2) shall have effect unless it is given by a party representing the majority of papers bound by the settlement in view of the provisions contained in sub-section (7) of section 289  19 of the Industrial Disputes Act, 1947. No such plea of termination under section 19(2) is taken in this case by the management. The agreement entered into on April 11, 1979 between the management and <ORG> which is not binding on the respondents cannot have the effect of depriving them of their right under the settlement dated June 29, 1973 as long as it is in operation. The first contention, therefore, fails.

It was, however, alternatively argued on behalf of the management that the agreement dated April 11, 1979 reducing the incentive benefit was fair and just and therefore it should not be interferred with. Apart from this bare assertion no material was placed by the management before the <ORG> under the Payment of Wages Act or <ORG> to show that the said agreement was fair and just. A reduction of incentive benefit in the circumstances of the case cannot be considered as either fair or just.

The <ORG> under the Payment of Wages Act and the industrial <ORG> were, therefore, right in rejecting the defence of the management. The appeal, therefore, fails and it is dismissed with costs.

S.R. Appeal dismissed.