Division Bench Holds Arbitration Award Continued To Bind Parties Until Replaced; Quashes Single Judge's Mandamus

A Division Bench comprising Justice D.K. Mahajan and Justice R.S. Narula heard Letters Patent Appeals Nos. 372 and 440 of 1966 challenging an order of a learned single Judge which had allowed a writ petition under Articles 226 and 227 directing the State of Punjab to refer an industrial dispute between clerical staff and Amritsar Rayon and Silk Mills (Private) Ltd. to the industrial tribunal.

The Bench allowed the appeals and set aside the single Judge's order, holding that no justiciable dispute existed for reference because the arbitration award, incorporated and adopted by the industrial tribunal, continued to "hold the field" until displaced by a fresh award. The Court found that the reasons recorded by the Government for not referring the matter were germane and not tainted by extraneous considerations. The Court, in its reasoning, observed: "Quite apart from this, however, it appears to us that even if an award has ceased to be in operation or in force and has ceased to be binding on the parties under the provisions of S. 19(6), it will continue to have its effect as a contract between the parties that has been made by industrial adjudication in place of the old contract. So long as the award remains in operation under S. 19(3), S. 23(c) stands in the way of any strike by the workmen and lockout by the employer in respect of any matter covered by the award. Again, so long as the award is binding on a party, breach of any of its terms will make the party liable to penalty under S.29 of the Act, to imprisonment which may extend to six months or with fine or with both. After the period of its operation and also the period for which the award is binding have elapsed, Ss. 23 and 29 can have no operation. We can, however, see nothing in the scheme of the Industrial Disputes Act to justify a conclusion that merely because these special provisions as regards prohibition of strikes and lockouts and of penalties for breach of award cease to be effective, the new contract as embodies in the award should also cease to be effective. On the contrary, the very purpose for which industrial adjudication has been given the peculiar authority and right of making new contracts between employers and workmen makes it reasonable to think that even though the period of operation of the award and the period for which it remains binding on the parties may elapse - in respect of both of which special provisions have been made under Ss. 23 and 29, respectively - may expire, the new contract would continue to govern the relations between the parties till it is displaced by another contract. The objection that no such benefit as claimed could accrue to the respondent after 31 March, 1959, must, therefore, be rejected." The Bench further stated that "As the basis, on which the dispute is sought to be raised, is not in existence, the conclusion is inescapable that there is no dispute."

Background The dispute arose after an industrial tribunal at Jullunder adopted an arbitration award fixing grades and scales for clerical staff and published the awards in the Punjab Government Gazette on 17 April 1959. The Amritsar Textiles Clerks' Association served a notice under Section 19(6) on 20 March 1963 seeking to terminate the arbitration award from 20 May 1963. Subsequently, a clerk, Waryam Singh, received a management notice dated 11 June 1963 that he would retire on completion of 27 years' service on 26 June 1963 pursuant to Clause VIII of the arbitration award. The Clerks' Association issued a demand notice asserting that the award had been terminated and that the management could not rely on it; the association then pursued conciliation under Section 12, which failed.

The Punjab Government communicated to the association that enquiries revealed "the award published in the Punjab Government Gazette dated 17 April, 1959, which still holds good" and relied upon an industrial tribunal decision that an award could not be terminated in part. The association's representation was rejected. The single Judge granted relief principally relying on Workmen of Oswal Weaving Factory v. State of Punjab, but the Division Bench held that that authority did not govern the facts and that the Supreme Court's reasoning in South Indian Bank Ltd. v. A.R. Chacko required the conclusion that an award continued to operate as a contractual regulation of relations until displaced by a fresh award. The result was that the petition under Articles 226 and 227 was dismissed and both appeals were allowed. In the circumstances of the case, the Bench recorded its order on costs.

Case Details: Case No.: Letters Patent Appeals Nos. 372 and 440 of 1966 Case Title: Letters Patent Appeals Nos. 372 and 440 of 1966 Appearances: For the Petitioner(s): Sri Bhagirath Dass, Counsel for the management For the Respondent(s): Sri Jatinder Vir Gupta, Counsel for respondent No.1 Judges: Justice D.K. Mahajan and Justice R.S. Narula