Al Wakeelo
Your Digital Lawyer, Always on Duty
Initializing Secure Chambers
Your Digital Lawyer, Always on Duty
Initializing Secure Chambers
Petitioner: PAKISTAN TOBACCO CO. LTD., CHITTAGONG VS Respondent: THE CHAIRMAN, SECOND LABOUR COURT OF EAST PAKISTAN
P L D 1971 Dacca 262
P L D 1971 Dacca 262
Before B. A. Siddiqi, C. J. and K. Hussain, J
PAKISTAN TOBACCO Co. LTD., CHITTAGONG ---Petitioner
Versus
THE CHAIRMAN, SECOND LABOUR COURT OF EAST PAKISTAN AND 18 OTHERS ---Respondents
Writ Petition No. 67 of 1970, decided on 27th August 1970.
(a) Industrial Relations Ordinance (XXIII of 1969),
S. 40(2) Interpretation‑Termination of award by party with notice of bits intention to revoke award‑Does not have the effect of extingui shing right or obligation flowing from award‑Such termination does not automatically put parties into position of status quo ante‑Parties only at liberty to negotiate terms of settlement afresh.
The questions for consideration before the High Court were:
(i) What is the legal effect of the revocation, under section 40(2), Industrial Relations Ordinance 1969, of a settle ment arrived at between the parties;
(ii) Whether with the revocation of the settlement the binding effect of the settlement is wiped off and the parties are at liberty to act as if no settlement existed so that they can revert back to the position obtaining prior to the date of settlement.
Held: From a reading of section 40(2) of the Industrial Relations Ordinance, 1969 it appears that if a provision has been made that during the period of settlement which has been agreed upon by the parties it will remain binding on the parties and after the expiry of the period it shall also continue to remain binding on the parties until notice is given by either party to the settlement expressing its intention no longer to be bound by the settlement. The latter clause of section 40(2) of the Ordinance provides that either party can give notice expressing its intention not to be bound by the settlement. It means that the binding effect of the settlement to the extent that the terms of the settlement cannot be negotiated or agitated during operation of the settlement ceases to be effective. The conse quence is that after the period of notice as contemplated in section 40(2) of the Ordinance the terms of the settlement become negotiable and the parties to the settlement can enter into a fresh settlement if they so desire, but it must be mutual. It also means that if there is a want of mutuality then either party can raise it as a dispute and take the matter to the Labour Court for getting a fresh award as the Labour Court shall decide. The interpretation that after the service of notice by either party to the settlement, the parties are placed into the position of status quo ante to the settlement cannot be accepted as it will be contrary to the well‑recognised principle of the law that once a contract or settlement is arrived at and acted upon mere passage of time of its operation or any expression of intention unilaterally by one of the parties to the contract or settlement to terminate its binding effect does not and cannot put an end to the obligations flowing therefrom nor are they reverted back to the position of status quo ante. As it is physically impossible for a man to go back in point of time to the period anterior to the date of settlement, similarly it is against all principles of law and contrary to equity and justice that a party to a contract or settlement should be allowed unilaterally to change his position to his advantage and to the disadvantage of the other party simply because the period of settlement has expired, even though the settlement was acted upon. This interpretation is in accord with the purpose of maintaining industrial peace and the growth of industrial production; it will also avoid social friction between the workers and the employers to a great extent.
The principle of res judicata is applied to the matters in Industrial Disputes though the principle is not applicable in terms but it is applicable on principle as it is founded by wisdom which is for all time. And there are good reasons why this principle should be applicable to decisions of Industrial Tribunals also. Legislation regulating the relation between Capital and Labour has two objects in view. It seeks to ensure to the workmen who have not the capacity to treat with capital on equal terms, fair returns for their labour. It also seeks to prevent disputes between employer and employees so that production might not be adversely affected and the larger interests of the society might not suffer. Now, if it is to be held that an adjudication loses its force when it is repudiated and that the whole controversy is at large, then the result would be that far from reconciling themselves to the award and settling down to work it, either party will treat it as a mere stage in the prosecu tion of a prolonged struggle, and far from bringing industrial peace, the awards would turn out to be but truces giving the parties breathing time before resuming hostile action with renewed vigour. On the other hand, if they are to be regarded as intended to have long term operation and at the same time hold that they are liable to be modified by change in the circumstances on which they are based, both the purposes of the Legislature would be served.
The view taken by the Courts is that a party to a dispute which has been terminated either by award or by settlement shall not be allowed to resile from its position unilaterally. Therefore, what the law provides by section 40(2) of the Ordinance is that by expressing its intention not to be bound by the award or the settlement after the period of expiry, any of the parties to the settlement is at liberty to negotiate the term which was the subject‑matter of the settlement but it does not mean that the rights and obligations arising out of the settlement or the rights and obligations flowing therefrom are wiped out.
(1957) 2 L L J 256; A I R 1957 S C 38 and Pakistan River Steamers Ltd. v. Province of East Pakistan P L D 1961 S C 393 ref.
(b) Industrial Disputes Ordinance (XXIII of 1969),
S 2(xxv) "Strike"‑Cessation of work even for a short duration could amount to "strike".
A plain reading of section 2(xxv) of the Industrial Relations Ordinance, 1969, means that there must be cessation of work by a body of workers and there must be a combination among them in ceasing to work upon a common understanding. The workers if they deliberately bring about the cessation of the working of machinery, even for a short period, it would be a "strike." There is no mention in section 2(xxv) of the duration which could be said to be a criterion for determining a strike.
(c) Constitution of Pakistan (1962),
Art. 98‑Other remedy open‑Provision for appeal made in statute but no appellate tribunal constituted‑Held, writ petitions in circumstance, only alternative remedy open.
M. J. Jaffer with M. Hafizullah for Petitioner.
Md. Mozammel Haq with Md. Moksudor Rahman for Respon dents.
Dates of hearing: 20th, 21st and 24th August 1970.
JUDGMENT
K. HUSSAIN, J.‑--The petitioner, Pakistan Tobacco Company Limited in this writ petition has challenged the order and award of the learned Labour Court dated 29th January 1970 passed in Industrial Dispute Case No. 75 of 1969.
The facts for disposal of this Rule are that the petitioner is a Limited Company registered under the Companies Act and the respondents are the workers of the petitioner‑company. On 20‑10‑1967 a settlement was arrived at between the company and the workers regarding certain terms and conditions of the service of the workers of this company at its Chittagong Unit in East Pakistan. The duration of this agreement was for two years. The workers through their Union served a notice dated 1st of March 1969 on the company intimating their desire to recall their settlement and on 1‑5‑1969 the Union Workers sub mitted a fresh charter of demand on the Company. An ad interim relief of Rs. 30 was granted to the workers which remained in operation for six months. Thereafter by a letter dated 21st August 1969 the Union informed the company that staggered tea‑breaks are also a part of their charter of demand submitted on 1st of May 1969. On 22nd December 1969 the workers discontinued attending their work during tea‑breaks en bloc thereby bringing about the stoppage of machinery. The company therefore on 24th December 1969 filed an application under section 34 of the Industrial Relations Ordinance, 1969 before the Second Labour Court for declaring the action of the workers in resorting to staggered tea‑breaks as strike. The workers filed objection against this application and during the pendency of the proceeding before the Labour Court there was an interim injunction against the workers for not resorting to the discontinuance of work taken en bloc. The decision was given on 29th January 1970 dismissing that application of the petitioner‑company. Against that the present Rule was obtained.
It may be stated that on 9th January 1970 the company and the workers have come to another settlement for two years on certain terms and conditions.
The Labour Court found that the workers by resorting to their staggered tea‑breaks en bloc did not violate any terms of the agreement as with the revocation of the settlement dated 20‑10‑1967 by the workers the binding effect of the settlement ceased and as such the workers were entitled to resort to staggered tea‑breaks en bloc. He also found that this resorting to tea‑breaks by the workers of the company does not amount to strike. A question of jurisdiction was also raised by the workers but no decision was given on that point.
Mr. Jaffer, the learned Advocate for the petitioner‑company has assailed the findings of the Labour Court on certain grounds and they may be taken up one after another. It may be stated that Mr. Mozammel Haq appearing on behalf of the respondents workers has also raised certain points as to the maintainability of this writ petition as well as the maintainability of the application under section 34 of the Industrial Relations Ordinance, 1969 which may also be considered in its place:
In this petition two fundamental questions are involved. First is‑what is the legal effect of the revocation of the settlement arrived at between the company and the workers, and secondly if the binding effect of the settlement continues then the resorting to tea‑breaks by the workers en bloc will amount to strike or not? It is therefore proper that these two fundamental points involved in this writ petition in the dispute between the company and the workers need begone into.
The first point for our consideration therefore is whether with the revocation of the settlement arrived at on 20‑10‑67 between the company and the workers by the service of notice of two months on 1‑3‑1969, the binding effect of the settlement ceases or continues to remain binding on the parties unless it is modified either by bilateral agreement or by raising a dispute and getting an award on that point from the competent Labour Court. The Labour Court is of opinion that with the revocation of the binding effect of the settlement by the service of notice the workers were at liberty to revert back to the position prior to the agreement of 20‑10‑67 arrived at between the company and the workers. It may be stated that there is no dispute regarding the fact that on 20‑10‑67 the company and the workers entered into an agreement which should be termed as settlement regarding certain terms and conditions of service and by this agreement the provision for staggered tea‑breaks was introduced for the first time. By this process the workers agreed to take their tea‑breaks which were prevailing prior to the agreement of 20‑10 67 in a different form. Prior to this agreement the entire workers used to take tea‑breaks en bloc which resulted in the closure of the machinery during tea‑breaks. But by this process of staggered tea‑breaks the workers agreed to take the tea‑breaks in batches, so that the machinery was not stopped and the production continued. This agreement was under its terms valid for two years. The workers by their notice dated 1‑3‑69 served on the company expressed the desire not to be bound by this settlement which was arrived at on 20‑10‑67. This notice was given in compliance with the requirement of law which provides that the settlement arrived at by the parties shall continue even after the expiry of the terms unless two months' notice is given by either party declaring their intention to revoke the settlement. There is no dispute between the parties that the settlement had binding effect for two years from 20‑10‑67; the notice was served by the Union on 1‑3‑69 and from 1‑5‑69 the binding effect of the agreement ceased. The question now falls for consideration is what is the effect of the revocation of the settlement‑whether by this revocation the parties are put to the position prior to the settlement or it means that the binding effect of the settlement continues but it is subject to the negotiation and variation either by a bilateral agreement or by raising a dispute and obtaining an award from the Labour Court. The view of the workers, as represented by Mr. Mozammel Haq, and which has found favour with the Labour Court is that with the revocation of the settlement the parties are at liberty to treat as if no settlement existed, so that they can revert back to the position prior to the date of settlement. Mr. Jaffer, the learned Advocate for the petitioner -company on the other hand, submits that that is not the intention and it cannot be the interpretation of the provision of law that with the revocation of the settlement the parties are reverted back to the position prior to the date of settlement.
The contentions of both the parties can now well be considered by reference to the section itself. The relevant section is section 40(2) of the Industrial Relations Ordinance and it may be quoted as follows:‑
"(2) A settlement shall be binding for such period as is agreed upon by the parties, and if no such period is agreed upon, for a period of one year from the date on which the memoran dum of settlement is signed by the parties to the dispute and shall continue to be binding on the parties after the expiry of the aforesaid period until the expiry of two months from the date on which either party informs the other party in writing of its intention no longer to be bound by the settlement."
The relevant provision of the East Pakistan Labour Disputes Act, 1965, which was in operation on the date of settlement was revoked, is to be found in section 15(2) and it may be quoted as follows:‑
"(2) A settlement shall be binding for such period as is agreed upon by the parties, and if no such period is agreed upon, for a period of one year 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 aforesaid period, 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."
From a reading of the two provisions it is clear that the language is substantially the same in both the enactments and therefore the principle of interpretation that will be applicable will be the same in both the cases. By section 67 of the Industrial Relations Ordinance, 1969, the East Pakistan Labour Disputes Act, 1965 along with other Acts was repealed but notwithstanding the repeal, a saving clause has been provided in sub‑clause (6) of clause (2) which reads as under:‑
"(2) Notwithstanding the repeal of any law by subsection (1), and without prejudice to the provisions of section 24 of the General Clauses Act, 1897 (X of 1897):‑
(a) .
(b) anything done, rules made, notification or order issued, officer appointed, Court constituted, notice given, proceedings commenced or other actions taken under any law shall be deemed to have been done, made, issued, appointed, con stituted, given, commenced or taken, as the case may, under the corresponding provisions of this Ordinance, to the extent of consistency therewith."
Section 67 (2) (b) of the Industrial Relations Ordinance clearly shows that whatever agreement was arrived at under the Labour Disputes Act, 1965 will be deemed to have continued and remained valid and operative as is made under the Industrial Relations Ordinance, 1969. It has already been found that both the provisions, one under section 42(2) of the present Ordinance and the other under section 15 (2) of the East Pakistan Labour Disputes Act, 1965 are substantially the same. It, therefore, remains to be seen what is the true interpretation of subsec tion (2) of section 40 of the Industrial Relations Ordinance, 1969.
From a reading of the section it appears that a provision has been made that during the period of settlement which has been agreed upon by the parties it will remain binding on the parties and after the expiry of the period it shall also continue to remain binding on the parties until notice is given by either party to the settlement expressing its intention no longer to be bound by the settlement. The latter clause of section 40 (2) of the Ordinance provides that either party can give notice expressing its intention not to be bound by the settlement. It means that the binding effect of the settlement to the extent that the terms of the settlement cannot be negotiated or agitated during operation of the settlement ceases to be effective. The consequence is that after the period of notice as contemplated in section 40(2) of the Ordinance the terms of the settlement become negotiable and the parties to the settlement can enter into a fresh settlement if they so desire, but it must be mutual. It also means that if there is a want of mutuality then either party can raise it as a dispute and take the matter to the Labour Court for getting a fresh award as the Labour Court shall decide. The interpretation sought to be given on the provisions of section 40(2) of the Ordinance that after the service of notice by either party to the settlement, the parties are placed into the position of status quo ante to the settlement cannot be accepted as it will be contrary to the well‑recognised principle of the law that once a contract or settlement is arrived at and acted upon mere passage of time of its operation or any expression of intention unilaterally by one of the parties to the contract or settlement to terminate its binding effect does not and cannot put an end to the obligations flowing therefrom nor are they reverted back to the position of status quo ante. As it is physically impossible for a man to go back in point of time to the period anterior to the date of settlement, similarly it is against all principles of law and contrary to equity and justice that a party to a contract or settlement should be allowed unilaterally to change his position to his advantage and to the disadvantage of the other party simply because the period of settlement has expired, even though the settlement was acted upon. This inter pretation is in accord with the purpose of maintaining industrial peace and the growth of industrial production; it will also avoid social friction between the workers and the employers to a great extent.
Mr. Jaffer in support of his contention has referred to several decisions. He has first cited a decision reported in (1957) 2 L L J 256. It is a decision of the Bombay High Court under the Industrial Disputes Act, 1947, as amended. The fact in that decision was that there was an award given by the Industrial Tribunal. After the period of its expiry, the employer gave a notice expressing his intention to revoke the award. Under the award a worker was entitled to get Rs. 3‑6‑0 per 1000 bidis and after the notice of revocation the employer sought to pay the workers at the rate of Rs. 2‑8‑0 per 1000 bidis. The workers did not accept the position and filed an application under the Payment and Wages Act for the recovery of the balance amount that was payable under the award. The contention of the workers were upheld. The employer filed a writ petition against that decision to the High Court of Bombay contending that with the notice of intention revoking the binding effect of the award he was free to give lesser pay to the workers. This contention was repelled by the Bombay High Court.
The provisions of subsection (6) of section 19 of the Indus trial Disputes Act, 1947 are as follows:‑
"Notwithstanding the expiry of the period of operation under subsection (3), the award shall continue to be binding on the parties until a period of two months has elapsed from the date on which notice is given by any party bound by award to the other party or parties intimating its intention to terminate the award."
Shah, J. one of the learned Judges of the Division Bench of the Bombay High Court observed as follows:‑
"When an award is delivered by the industrial tribunal it has the effect of imposing a statutory contract governing the relations of the employer and the employee. It is true that statutory contract may be terminated in the manner prescribed by subsection (6) of section 19. After the statutory contract is terminated by notice the employer by failing to abide by the terms of the award does not incur the penalties provided by the Industrial Disputes Act, nor can the award be enforced in the manner prescribed by section 20 of Industrial Disputes (Appellate Tribunal) Act, 1950. But the termination of the award has, in our judgment, not the effect of extinguishing the rights flowing therefrom. Evidently by the termination of the award the contract of employment is not terminated. The employer and the employee remain master and servant in the industry in which they are engaged, unless by notice the employer has also simultaneously with the termination of the award terminated the employment of the employee. If the employment is not terminated, it is difficult to bold that the right which has been granted under the award automatically ceases to be effective from the date on which notice of termina tion of the award becomes effective. In our judgment; the effect of the termination of the award is only to prevent the enforcement of the obligations under the award in the manner prescribed, but the rights and obligations which flow from the award are not wiped out."
Mr. Jaffer has also referred to a decision of the Supreme Court of India, reported in A I R 1957 S C 38. In this decision also there was an award and binding effect of the award after its expiry under the provision of section 19 (6) of the Indus trial Disputes Act, 1947 as amended was in question. In this case, the principle of res judicata was applied to the matters in Industrial Disputes Act with the observation that though the principle is not applicable in terms but it is applicable on principle as it is founded by wisdom which is for all time. Thereafter the following observation was made:‑
"And there are good reasons why this principle should be applicable to decisions of Industrial Tribunals also. Legislation regulating the relation between Capital and Labour has two objects in view. It seeks to ensure to the workmen who have not the capacity to treat with capital on equal terms, fair returns for their labour. It also seeks to prevent disputes between employer and employees so that production might not be adversely affected and the larger interests of the society might not suffer. Now, if we are to hold that an adjudication loses its force when it is repudiated under section 19 (6) and that the whole controversy is at large, then the result would be that far from reconciling themselves to the award and settling down to work it, either party will treat it as a mere stage in the prosecution of a prolonged struggle, and far from bringing industrial peace, the awards would turn out to be but truces giving the parties breathing time before resuming hostile action with renewed vigour.
On the other hand, if we are to regard them as intended to have long term operation and at the same time hold that they are liable to be modified by change in the circumstances on which they are based, both the purposes of the Legislature would be served."
Mr. Jaffer has also referred to a decision of our Supreme Court, reported in P L D 1961 S C 393. Mr. Jaffer has relied on the following observation of the Supreme Court which was made in a matter relating to an industrial dispute under the Industrial Disputes Act, 1947 as amended in Pakistan:‑
"As a last‑resort learned counsel contends that when parties have entered into an agreement or an award has been delivered, parties should not be allowed to take a position or make a claim inconsistent with the award or the settlement unless they are able to show some change of condition since the award was delivered or the settlement arrived at. It is true that an award delivered on a particular date should…
Read the unabridged text and precedent citation network on Al Wakeelo Legal Research Platform.