M/S. HARYANA SURAJ MALTING LTD. versus PHOOL CHAND on 18 May 2018

[2018] 5 S.C.R. 377

M/S. HARYANA SURAJ MALTING LTD.

v.

PHOOL CHAND

(Civil Appeal No. 5650 of 2018)

MAY 18, 2018

[KURIAN JOSEPH, MOHAN M. SHANTANAGOUDARAND NAVIN SINHA, JJ.]

Industrial Disputes Act, 1947: ss. 16, 17 and 17A – Ex-parteaward – Power to recall, by the Industrial Tribunal/Labour Courtafter it becomes enforceable – Held: Industrial tribunal/labour courtis not functus officio after the award has become enforceable, asfar as setting aside an ex parte award is concerned – It is within itspowers to entertain an application as per the scheme of the Act andin terms of the rules of natural justice – Merely because an awardhas become enforceable, does not necessarily mean that it hasbecome binding – For an award to become binding, it should bepassed in compliance with the principles of natural justice –Furthermore, in case a party is in a position to show sufficient causefor its absence before the Labour Court/Tribunal when it was setex parte, the Labour Court/Tribunal, in exercise of its ancillary orincidental powers, is competent to entertain such an application –That power cannot be circumscribed by the principle of functusofficio.

Disposing of the appeals, the Court

HELD: 1.1 Under Section 17(1) of the Industrial DisputesAct, 1947, an award shall be published by the appropriateGovernment within 30 days of its receipt. Under Section 17(2),the award becomes final subject to Section 17A. Under Section17A, an award becomes enforceable on the expiry of 30 daysfrom the date of its publication under Section 17. Under thestatutory scheme, the labour court/tibunal is empowered to followits own procedure as it thinks fit, meaning thereby, a procedurewhich is fit and proper for the settlement of the industrial disputeand for maintaining industrial peace. If a party fails to attend thecourt/tribunal without showing sufficient cause, the court/tribunalcan proceed ex parte and pass an ex parte award. The award,

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Aex parte or otherwise, has to be sent to the appropriateGovernment as soon as it is made and the appropriateGovernment has to publish it within 30 days of its receipt. Theaward thus, published becomes enforceable after a period of 30days of its publication. Furthermore, an ex parte award can beset aside in case the court/tribunal is approached within 30 daysBof its publication under Section 17 of the Act, is no more resintegra. [Para 7, 12, 14] [382-F-G; 383-C-D; 384-F-G; 385-A]

1.2 On a close reading of Grindlayscase in the backgroundof the analysis of law, it is difficult to comprehend that the powerto set aside an ex parte award is not available to a Labour Court/CIndustrial Tribunal. On the principles of natural justice, and on apurposive interpretation of the scheme of the Act and Rules, it isdifficult also to discern that the ratio of the decision in Grindlayscase, is what is stated to the extent that an application for settingaside an ex parte award has to be filed within 30 days of publicationDof the award. On the contrary, the ratio in Grindlays case is thatthe tribunal can exercise its ancillary and incidental powers, onthe broader principles contained under Order IX Rule 13 of theCPC. No doubt, the Limitation Act, 1963 is not applicable to thelabour court/tribunal. [Para 30] [394-GH; 395-A]

E1.3 In case a party is in a position to show sufficient causefor its absence before the labour court/ tribunal when it was setex parte, the labour court/tribunal, in exercise of its ancillary orincidental powers, is competent to entertain such an application.That power cannot be circumscribed by limitation. What is thesufficient cause and whether its jurisdiction is invoked within aFreasonable time should be left to the judicious discretion of thelabour court/tribunal. [Para 32] [396-D-E]

1.4 It is a matter of natural justice that any party to thejudicial proceedings should get an opportunity of being heard,and if such an opportunity has been denied for want of sufficientGreason, the labour court/tribunal which denied such an opportunity,being satisfied of the sufficient cause and within a reasonabletime, should be in a position to set right its own procedure.Otherwise as held in Grindlays case, an award which may be anullity will have to be technically enforced. It is difficult toHcomprehend such a situation under law. [Para 33] [396-E-F]

1.5 Merely because an award has become enforceable, doesnot necessarily mean that it has become binding. For an award tobecome binding, it should be passed in compliance with theprinciples of natural justice. An award passed denying anopportunity of hearing when there was a sufficient cause for non-appearance can be challenged on the ground of it being nullity.An award which is a nullity cannot be and shall not be a bindingaward. In case a party is able to show sufficient cause within areasonable time for its non-appearance in the labour court/tribunalwhen it was set ex parte, the labour court/tribunal is bound toconsider such an application and the application cannot be rejectedon the ground that it was filed after the award had becomeenforceable. The labour court/tribunal is not functus officio afterthe award has become enforceable as far as setting aside an exparte award is concerned. It is within its powers to entertain anapplication as per the scheme of the Act and in terms of the rulesof natural justice. The Industrial Disputes Act, 1947 is a welfarelegislation intended to maintain industrial peace. In that view ofthe matter, certain powers to do justice have to be conceded tothe labour court/tribunal, whether it is called ancillary, incidentalor inherent. [Para 35] [397-B-E]

1.6 When an application for setting aside an ex parte awardis made at the instance of the management, the labour court/tribunal has to balance equities. The awards are remitted to thelabour court for consideration as to whether there was sufficientcause for non- appearance of the management. Since the litigationhas been pending for a long time, the appellants are directed topay an amount of Rs.1,00,000/- in each case to the workmen byway of provisional payment. However, the payment is subject tothe final outcome of the awards and would be adjustedappropriately. [Para 36] [397-F-G]

Grindlays Bank Ltd. v. Central Government IndustrialTribunal and others [1981] SCR 341 : (1980) Suppl.SCC 420 – relied on.

Kapra Mazdoor Ekta Union v. Birla Cotton Spinningand Weaving Mills Ltd. and Another [2005] 2 SCR888 : (2005) 13 SCC 777 – distinguished.

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CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5650Gof 2018.

From the Judgment and Order dated 08.09.2009 of the High Courtof Punjab and Haryana at Chandigarh in Civil Writ Petition No.15090 of2000

WITH

Civil Appeal No. 5649 of 2018

Civil Appeal No. 5893 of 2012.

Mr. Chetan Joshi, Rameshwar Prasad Goyal, Aftab Ali Khan,M. Mohsin Islaily, Advs. for the Appellant.

Rishi Malhotra, Adv. for the Respondent.

The Judgment of the Court was delivered by KURIAN, J. 1. Leave granted.

2. The question arising for consideration in this case is whetherthe Industrial Tribunal/Labour Court is functus officio after the awardhas become enforceable, and is thus, prevented from considering anapplication for setting aside an ex parte award.

3. In view of the conflict between two decisions of this Court -Sangham Tape Co.v. Hans Raj1 and Radhakrishna Mani Tripathiv. L.H Patel and another2, by order dated 21.01.2011 in HaryanaSuraj Malting Limited v. Phool Chand3, a reference to a larger benchwas made in the following terms:

“1. Whether the Industrial Tribunal/Labour Court becomesfunctus officio after 30 days of the pronouncement/publication ofthe award and loses all powers to recall an ex parte award on anapplication made by the aggrieved party after 30 days from thedate of pronouncement/publication of the award is the questionthat once again arises for consideration in these cases.

2. It may be noted that on this question two Division Benchdecisions have taken apparently conflicting views. In SanghamTape Co. v. Hans Raj a two-Judge Bench held and observedthat an application for recall of an ex parte award may beentertained by the Industrial Tribunal/Labour Court only in case itis filed before the expiry of 30 days from the date ofpronouncement/publication of the award. A contrary view wastaken in Radhakrishna Mani Tripathi v. L.H. Patel to whichone of us (Aftab Alam, J.) was a party.

1 (2005) 9 SCC 331

2 (2009) 2 SCC 81

3 (2012) 8 SCC 579

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3. In both cases, that is to say, Sangham Tape Co. andRadhakrishna Mani Tripathi, the Court referred to and reliedupon the earlier decisions in Grindlays Bank Ltd. v. CentralGovt. Industrial Tribunal and Anil Sood v. Labour Court butread and interpreted those two decisions completely differently.

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4. The conflict which has arisen as a result of the two decisionscan only be resolved by a larger Bench. Let these cases be,therefore, listed before a three-Judge Bench.”

4. Heard learned counsel appearing for the parties and Mr. ShekharNaphade, learned senior counsel assisting the Court as Amicus Curiae.

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5. The Industrial Disputes Act, 1947 (hereinafter referred to as“the Act”) was enacted “…to make provision for the investigationand settlement of industrial disputes, and for certain otherpurposes”. Chapter IV provides for the “procedure, powers and dutiesof authorities”. Under Section 11(1) of Chapter IV, it is provided thatDthe Labour Court or Tribunal can follow such procedure as it thinks fit.

“11(1) Subject to any rules that may be made in this behalf, anarbitrator, a Board, Court, Labour Court, Tribunal or NationalTribunal shall follow such procedure as the arbitrator or otherauthority concerned may think fit.”

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6. Under Section 17(1), an award shall be published by theappropriate Government within 30 days of its receipt. Under Section17(2), the award becomes final subject to Section 17A. Under Section17A, an award becomes enforceable on the expiry of 30 days from thedate of its publication under Section 17.

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7. Section 20 deals with the commencement and conclusion ofproceedings. Under Section 20(3), proceedings before the Court/Tribunalshall be deemed to have been concluded on the date on which the awardbecomes enforceable under Section 17A.

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-“20. Commencement and conclusion of proceedings.(1) A conciliation proceeding shall be deemed to have commencedon the date on which a notice of strike or lock- out under section22 is received by the conciliation officer or on the date of theorder referring the dispute to a Board, as the case may be.

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(2) A conciliation proceeding shall be deemed to have concluded- (a) where a settlement is arrived at, when a memorandum ofthe settlement is signed by the parties to the dispute;

(b) where no settlement is arrived at, when the report of theconciliation officer is received by the appropriateGovernment or when the report of the Board is publishedunder section 17, as the case may be; or

(c) when a reference is made to a Court, Labour Court,Tribunal or National Tribunal] under section 10 duringthe pendency of conciliation proceedings.

(3) Proceedings before an arbitrator under section 10A orbefore a Labour Court, Tribunal or National Tribunal shall bedeemed to have commenced on the date of the reference of thedispute for arbitration or adjudication, as the case may be andsuch proceedings shall be deemed to have concluded on the dateon which the award becomes enforceable under section 17A.”

8. Section 38 provides for power to frame rules for the purpose ofgiving effect to the provisions of the Act including the powers andprocedure of the Courts/Tribunals.

9. Rule 10B(9), as introduced in 1984 of the Industrial Disputes(Central) Rules, 1957 (hereinafter referred to as the “Central Rules”),reads as follows:

“10B(9). In case any party defaults or fails to appear at any stagethe Labour Court, Tribunal or National Tribunal, as the case maybe, may proceed with the reference ex parte and decide thereference application in the absence of the defaulting party:

Provided that the Labour Court, Tribunal or National Tribunal,as the case may be, may on the application of either party filedbefore the submission of the award revoke the order that thecase shall proceed ex parte, if it is satisfied that the absence ofthe party was on justifiable grounds.”

10. Rule 22 of the Central Rules also provides that the Court/Tribunal can proceed ex parte in case any party fails to attend the Court/Tribunal without sufficient cause being shown. The Rule reads as follows:

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A“22. Board, Court, Labour Court, Tribunal, NationalTribunal or Arbitrator may proceed ex parte.-If withoutsufficient cause being shown, any party to proceeding before aBoard, Court, Labour Court, Tribunal, National Tribunal orArbitrator fails to attend or to be represented, the Board, Court,Labour Court, Tribunal, National Tribunal or Arbitrator mayBproceed, as if the party had duly attended or had been represented.”

11. Rule 24 provides that the Boards, Courts, Labour Courts,Tribunals and National Tribunals shall have the same powers as arevested in a Civil Court in respect of the matters specified within theRule. The Rule reads as follows:C

“24. Power of Boards, Courts, Labour Courts, Tribunalsand National Tribunals.- In addition to the powers conferred bythe Act, Boards, Courts, Labour Courts, Tribunals and NationalTribunals shall have the same powers as are vested in a CivilCourt under the Code of Civil Procedure, 1908, when trying aDsuit, in respect of the following matters, namely:- (a) discovery and inspection; (b) granting adjournment; (b) reception of evidence taken on affidavit, and the Board, Court,ELabour Court, Tribunals or National Tribunal may summon andexamine any person whose evidence appears to it to be materialand shall be deemed to a civil court within the meaning of sections480 and 482 of the Code of Criminal Procedure, 1973.”

12. Thus, under the statutory scheme, the Labour Court/TribunalFis empowered to follow its own procedure as it thinks fit, meaning thereby,a procedure which is fit and proper for the settlement of the industrialdispute and for maintaining industrial peace. If a party fails to attend theCourt/Tribunal without showing sufficient cause, the Court/Tribunal canproceed ex parte and pass an ex parte award. The award, ex parte orotherwise, has to be sent to the appropriate Government as soon as it isGmade and the appropriate Government has to publish it within 30 days ofits receipt. The award thus published becomes enforceable after a periodof 30 days of its publication.

13. In case of an ex parte award, whether the Court/Tribunal canset aside the same after 30 days of its publication, is the question to beHconsidered.

14. That an ex parte award can be set aside in case the Court/Tribunal is approached within 30 days of its publication under Section 17of the Act, is no more res integra. In Grindlays Bank Ltd. v. CentralGovernment Industrial Tribunal and others4, it has been held atparagraph-14 that:

“14. The contention that the Tribunal had become functus officioand, therefore, had no jurisdiction to set aside the ex parte awardand that the Central Government alone could set it aside, does notcommend to us. Sub-section (3) of Section 20 of the Act providesthat the proceedings before the Tribunal would be deemed tocontinue till the date on which the award becomes enforceableunder Section 17-A. Under Section 17-A of the Act, an awardbecomes enforceable on the expiry of 30 days from the date of itspublication under Section 17. The proceedings with regard to areference under Section 10 of the Act are, therefore, not deemedto be concluded until the expiry of 30 days from the publication ofthe award. Till then the Tribunal retains jurisdiction over the disputereferred to it for adjudication and up to that date it has the powerto entertain an application in connection with such dispute. Thatstage is not reached till the award becomes enforceable underSection 17-A…….”

At paragraph-6 inGrindlays(supra), it was held that the Tribunal canexercise such powers, if it thinks fit, in the interest of justice. It has alsobeen held that the Tribunal is endowed with such incidental or ancillarypowers as are necessary to discharge its functions effectively for thepurpose of doing justice between the parties, unless there is any expressindication in the statute to the contrary. To quote:

“6. We are of the opinion that the Tribunal had the power topass the impugned order if it thought fit in the interest of justice. Itis true that there is no express provision in the Act or the rulesframed thereunder giving the Tribunal jurisdiction to do so. But itis a well known rule of statutory construction that a Tribunal orbody should be considered to be endowed with such ancillary orincidental powers as are necessary to discharge its functionseffectively for the purpose of doing justice between the parties.In a case of this nature, we are of the view that the Tribunalshould be considered as invested with such incidental or ancillary 4 1980 (Supp) SCC 420

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powers unless there is any indication in the statute to the contrary.We do not find any such statutory prohibition. On the other hand,there are indications to the contrary.”

15. In paragraph-7, it has been held that although the Tribunal orother authorities specified in Section 11 of the Act are not Courts, theyBhave the trappings of a Court and they exercise quasi-judicial functions.

16. At paragraph-8, it has been held that “... all these authoritiesbeing quasi-judicial in nature, objectively determining mattersreferred to them, have to exercise their discretion in a judicialmanner, without caprice and according to the general principles ofClaw and rules of natural justice”.

17. At paragraph-10, it has been held that an award passed withoutparticipation on sufficient causes is a nullity, and hence, the Court/Tribunalhas the power and duty to set aside an ex parte award.

18. At paragraph-11, it has been held that the view taken atDparagraph-10 is in consonance with the mandate of Rule 22.

19. At paragraph-12, the Court took the view that going by Rule24 of the Central Rules regarding grant of adjournment being governedby the Code of Civil Procedure, 1908 (hereinafter referred to as “theCPC”), the provisions of Order IX Rule 13 of the CPC would apply inEcase of an ex parte award.

20. In paragraph-13, it was held that setting aside an ex parteaward is a matter of procedural review exercised ex debito justitiae toprevent abuse of its process and such powers are inherent in everyCourt or Tribunal.

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21. Paragraphs-10 to 13 read as follows:

“10. When sub-section (1) of Section 11 expressly and in clearterms confers power upon the Tribunal to regulate its ownprocedure, it must necessarily be endowed with all powers whichbring about an adjudication of an existing industrial dispute, afteraffording all the parties an opportunity of a hearing. We are inclinedto the view that where a party is prevented from appearing at thehearing due to a sufficient cause, and is faced with an ex parteaward, it is as if the party is visited with an award without a noticeof the proceedings. It is needless to stress that where the Tribunal G

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proceeds to make an award without notice to a party, the awardis nothing but a nullity. In such circumstances, the Tribunal hasnot only the power but also the duty to set aside the ex parteaward and to direct the matter to be heard afresh.

11. The language of Rule 22 unequivocally makes the jurisdictionof the Tribunal to render an ex parte award conditional upon thefulfilment of its requirements. If there is no sufficient cause forthe absence of a party, the Tribunal undoubtedly has jurisdictionto proceed ex parte. But if there was sufficient cause shownwhich prevented a party from appearing, then under the terms ofRule 22, the Tribunal will have had no jurisdiction to proceed andconsequently, it must necessarily have power to set aside the exparte award. In other words, there is power to proceed ex parte,but such power is subject to the fulfilment of the condition laiddown in Rule 22. The power to proceed ex parte under Rule 22carries with it the power to enquire whether or not there wassufficient cause for the absence of a party at the hearing.

12. Under Rule 24(b) a Tribunal or other body has the powersof a civil court under Order 17 of the Code of Civil Procedure,relating to the grant of adjournments. Under Order 17, Rule 1, acivil court has the discretion to grant or refuse an adjournment.Where it refuses to adjourn the hearing of a suit, it may proceedeither under Order 17, Rule 2 or Rule 3. When it decides toproceed under Order 17, Rule 2, it may proceed to dispose of thesuit in one of the modes directed in that behalf by Order 9, or tomake such other order as it thinks fit. As a necessary corollary,when the Tribunal or other body refuses to adjourn the hearing, itmay proceed ex parte. In a case in which the Tribunal or otherbody makes an ex parte award, the provisions of Order 9, Rule 13of the Code are clearly attracted. It logically follows that theTribunal was competent to entertain an application to set aside anex parte award.

13. We are unable to appreciate the contention that merelybecause the ex parte award was based on the statement of themanager of the appellant, the order setting aside the ex parteaward, in fact, amounts to review. The decision in Patel NarshiThakershi v. Pradyumansinghji Arjunsinghji is distinguishable.

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SUPREME COURT REPORTS

AIt is an authority for the proposition that the power of review isnot an inherent power, it must be conferred either specifically orby necessary implication. Sub-sections (1) and (3) of Section 11of the Act themselves make a distinction between procedure andpowers of the Tribunal under the Act. While the procedure is leftto be devised by the Tribunal to suit carrying out its functionsBunder the Act, the powers of civil court conferred upon it areclearly defined. The question whether a party must be heard beforeit is proceeded against is one of procedure and not of power in thesense in which the words are used in Section 11. The answer tothe question is, therefore, to be found in sub-section (1) of SectionC11 and not in sub-section (3) of Section 11. Furthermore, differentconsiderations arise on review. The expression “review” is usedin the two distinct senses, namely (1) a procedural review whichis either inherent or implied in a court or Tribunal to set aside apalpably erroneous order passed under a misapprehension by it,and (2) a review on merits when the error sought to be correctedDis one of law and is apparent on the face of the record. It is in thelatter sense that the court in Patel Narshi Thakershi case heldthat no review lies on merits unless a statute specifically providesfor it. Obviously when a review is sought due to a proceduraldefect, the inadvertent error committed by the Tribunal must beEcorrected ex debito justitiae to prevent the abuse of its process,and such power inheres in every court or Tribunal.”

22. The Court has unambiguously held that it is the power andduty of the Tribunal exercising its ancillary and incidental powers to setFaside an award which is a nullity. In that process, the Tribunal is governedby the principles of Order IX Rule 13 of the CPC. However, apparently,on facts, the Court came to the conclusion that the power to set aside anex parte award remained only till the award had become enforceableunder Section 17A, viz., before the expiry of 30 days from the date of itsGpublication under Section 17. It may be seen that the application forsetting aside the award inGrindlays(supra) was filed within 30 days ofpublication; the award was made on 09.12.1970, published on 25.12.1976and the application was filed on 19.01.1977. It is interesting to note thatin Grindlays(supra), the Court summarised the legal position in theconcluding paragraph to the effect that “...There is no finality attachedH

to an ex parte award because it is always subject to its being setaside on sufficient cause being shown. The Tribunal had the powerto deal with an application properly made before it for setting asidethe ex parte award and pass suitable orders.”

23. In Anil Soodv. Presiding Officer, Labour Court II5 , theCourt relied on Grindlays(supra). The facts in the case of Anil Sood(supra) are important for the purpose of calculating the 30 days period.In this case, a reference was made to the Labour Court and the awardwas made on 11-09-1995. An application was filed by the appellant thereinon 06-11-1995 contending that he had no notice of the proceedings. Thatapplication was dismissed on the ground that the Labour Court hadbecome functus officio. It is pertinent to note that the decision does notmention the date of publication of the award. Following the decision inGrindlays(supra), the Court held as follows:

“5. This Court in Grindlays Bank Ltd. case examined thescheme of the provisions under the Industrial Disputes Act andenunciated that Section 11 of the Industrial Disputes Act conferredample powers upon the Tribunal to devise its own procedure inthe interest of justice which includes powers which bring out theadjudication of an existing industrial dispute. Sub-sections (1) and(3) of Section 11 of the Act thereby indicate the difference betweenprocedure and powers of the Tribunal under the Act, while theprocedure is left to be devised by the Tribunal to suit carrying outits functions under the Act, the extent of powers of the civil courtare clearly set out.

6. The aspect that the party against whom award is to bemade due opportunity to defend has to be given is a matter ofprocedure and not that of power in the sense in which the languageis adopted in Section 11. When matters are referred to the tribunalor court they have to be decided objectively and the tribunals/courts have to exercise their discretion in a judicial manner withoutarbitrariness by following the general principles of law and rulesof natural justice.

7. The power to proceed ex parte is available under Rule 22of the Central Rules which also includes the power to inquirewhether or not there was sufficient cause for the absence of a 5 (2001) 10 SCC 534

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party at the hearing, and if there is sufficient cause shown whichprevented a party from appearing, then if the party is visited withan award without a notice which is a nullity and therefore theTribunal will have no jurisdiction to proceed and consequently, itmust necessarily have power to set aside the ex parte award.

8. If this be the position in law, both the High Court and theTribunal (sic Labour Court) fell into an error in stating that theLabour Court had become functus officio after making the awardthough ex parte. We set aside the order made and the awardpassed by the Labour Court and affirmed by the High Court inthis regard, in view of the fact that the learned counsel for therespondent conceded that application filed by the appellant beallowed, set aside the ex parte award and restore the reference.To decide the matter afresh, the parties shall appear before theLabour Court on 11-12-2000 to take further directions as regardsthe proceedings. As the matter is very old, it would be appropriatefor the Labour Court to dispose of this reference as expeditiously as possible but not later than six months from today.”

24. InSangham(supra), the Court took the view that the LabourCourt/Tribunal retains jurisdiction over disputes referred to it foradjudication only up to the expiry of 30 days of the publication of theaward, and thereafter, the Court/Tribunal becomes functus officio.Referring to paragraph-14 inGrindlays(supra), the Court held as follows:

“8. The said decision is, therefore, an authority for theproposition that while an Industrial Court will have jurisdiction toset aside an ex parte award, but having regard to the provisioncontained in Section 17-A of the Act, an application therefor mustbe filed before the expiry of 30 days from the publication thereof.Till then the Tribunal retains jurisdiction over the dispute referredto it for adjudication, and only up to that date, it has the power toentertain an application in connection with such dispute.

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10. In view of this Court’s decision in Grindlays Bank [1980Supp SCC 420 : 1981 SCC (L&S) 309] such jurisdiction could beexercised by the Labour Court within a limited time frame, namely,within thirty days from the date of publication of the award.Once an award becomes enforceable in terms of Section 17-A of theAct, the Labour Court or the Tribunal, as the case may be, doesnot retain any jurisdiction in relation to setting aside of an awardpassed by it. In other words, upon the expiry of 30 days from thedate of publication of the award in the gazette, the same havingbecome enforceable, the Labour Court would become functusofficio.

11. Grindlays Bank has been followed in Satnam Verma v.Union of India and J.K. Synthetics Ltd. v. CCE.”

25. This Court in Sangham (supra) also referred to the decision inAnil Sood (supra) and noted as follows:

“12.This Court in Anil Sood did not lay down any law to thecontrary. The contention raised on the part of Mr Jain to the effectthat in fact in that case an application for setting aside an awardwas made long after 30 days cannot be accepted for more thanone reason. Firstly, a fact situation obtaining in one case cannotbe said to be a precedent for another. (See Mehboob DawoodShaikh v. State of Maharashtra). Secondly, from a perusal ofthe said decision, it does not appear that any date of publication ofthe award was mentioned therein so as to establish that even onfact, the application was made 30 days after the expiry of publicationof the award. Furthermore, the said decision appears to have beenrendered on concession.”

26. InJammu Tehsil v. Hakumar Singh and others6, followingthe decisions in Grindlays(supra), this Court at paragraph-5 held that“In view of this Court’s decision in Grindlays Bank case suchjurisdiction could be exercised by the Labour Court within a limitedtime-frame, namely, within thirty days from the date of publicationof the award. Once an award becomes enforceable in terms ofSection 17-A of the Act, the Labour Court or the Tribunal, as thecase may be, does not retain any jurisdiction in relation to settingaside of an award passed by it. In other words, upon the expiry of30 days from the date of publication of the award in the Gazette, AB

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Athe same having become enforceable, the Labour Court wouldbecome functus officio”.

27. In Radhakrishna Mani Tripathi (supra) the argument wasthat Rule 26 (2) of the Industrial Disputes (Bombay) Rules is ultra vires.The Rule as quoted in the decision, to the extent relevant, reads as follows:

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“(2) Where any award, order or decision is made ex parteunder sub-rule (1), the aggrieved party, may within thirty days ofthe receipt of a copy thereof, make an application to the Board,Court, Labour Court, Tribunal or an arbitrator, as the case maybe, to set aside such award, order or decision. If the Board, Court,CLabour Court, Tribunal or arbitrator is satisfied that there wassufficient cause for non-appearance of the aggrieved party, it orhe may set aside the award, order or decision so made and shallappoint a date for proceeding with the matter:

Provided that, no award, order or decision shall be set aside onDany application as aforesaid unless notice thereof has been servedon the opposite party.”

It was contended that under Section 17-A of the Act an award becomesenforceable on expiry of 30 days from the date of its publicationwhereupon the Labour Court is rendered functus officio. Reliance wasEplaced on certain observations inGrindlays(supra) and it was furthersubmitted that the provision of Rule 26(2) of the Bombay Rules was inderogation of Section 17-A of the Act. However, the Court held as follows:

“15. Similarly, the Court pointed out in Grindlays Bank, theprovision of Rule 24(b) empowered the Industrial Courts to refuseto adjourn the hearing and to proceed ex parte. Hence, in a caseFin which the Industrial Court makes an ex parte award theprovisions of Order 9 Rule 13 CPC would be clearly attracted. Itlogically follows that the Tribunal is competent to entertain anapplication to set aside an ex parte award. (Vide para 12 of thedecision.) The Court thus founded the Industrial Court’s jurisdictionGand power to recall an ex parte award on Rules 22 and 24(b) ofthe Central Rules. It is thus to be seen that in Grindlays Bankwhat this Court held to be implicit in Rule 22 of the Central Rulesis made explicit and clear in the Bombay Rules in the form of sub-rule (2) of Rule 26.”

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28. After referring to and quoting paragraph-14 in Grindlays(supra), it was further held that:

“16. ...From the above quotation it would appear that inGrindlays Bank the recall application was filed within thirty daysfrom the date of publication of the award and hence, the objectionraised on the basis of Section 17-A did not arise in this case. InGrindlays Bank this Court did not say that the Industrial Courtswould have no jurisdiction to entertain an application for settingaside an award made after thirty days of its publication.Nevertheless, on the basis of the passage marked in italics in theabove quotation Ms Issar strongly contended that that is the trueimport of the judgment.

17. We are unable to accept. The position is made clear inthe later decision in Anil Sood v. Labour Court. In Anil Soodinterestingly the Labour Court had rejected the recall applicationon the very same ground that after making the award it becamefunctus officio in the matter. The order of the Labour Court waschallenged before the High Court but the High Court also tookthe same view. In appeal this Court noted that the award wasmade on 11-9-1995 and the application for its recall was filed on6-11-1995.…

18. In light of the decision in Anil Sood we find no substancein the appellant’s submission based on Section 17-A of the Act.There being no substance in the first limb of the submission thereis no question of any conflict between Rule 26(2) of the BombayRules and Section 17-A of the Act.”

29. Kapra Mazdoor Ekta Unionv. Birla Cotton Spinningand Weaving Mills Ltd. and Another7 is a decision by a Bench of 3Judges which has also referred to Grindlays (supra). It is a case wherethe award was made on 12.06.1987 and published on 10.08.1987. Therecall application was made on 07.09.1987, before the expiry of the 30days period provided under Section 17A. It is also to be noted that theapplication for recall of the award was with a prayer for raising anadditional issue. To quote from paragraph-20 of the judgment, “...Therecall of the award of the Tribunal was sought not on the ground A

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Athat in passing the award the Tribunal had committed any proceduralillegality or mistake of the nature which vitiated the proceedingitself and consequently the award, but on the ground that somematters which ought to have been considered by the Tribunal werenot duly considered. Apparently the recall or review sought was nota procedural review, but a review on merits. Such a review was notBpermissible in the absence of a provision in the Act conferring thepower of review on the Tribunal either expressly or by necessaryimplication.” Therefore,Kapra(supra) is distinguishable on facts andon the question of law dealt with therein: it was a case of substantivereview whereas, setting aside an ex parte award is a matter of proceduralCreview. In the case of procedural review, as held in Kapra(supra), theparty “... has to establish that the procedure followed by the courtor the quasi-judicial authority suffered from such illegality that itvitiated the proceeding and invalidated the order made therein,inasmuch as the opposite party concerned was not heard for nofault of his, or that the matter was heard and decided on a dateDother than the one fixed for hearing of the matter which he couldnot attend for no fault of his. In such cases, therefore, the matterhas to be reheard in accordance with law without going into themerit of the order passed. The order passed is liable to be recalled and reviewed not because it is found to be erroneous, but becauseEit was passed in a proceeding which was itself vitiated by an errorof procedure or mistake which went to the root of the matter andinvalidated the entire proceeding. In Grindlays Bank Ltd. v. CentralGovt. Industrial Tribunal it was held that once it is established thatthe respondents were prevented from appearing at the hearing dueto sufficient cause, it followed that the matter must be reheard andFdecided again.”

30. Therefore, all the decisions hereinabove noted by us referredtoGrindlays(supra). On a close reading of paragraph-14 ofGrindlays(supra), in the background of the analysis of law under paragraphs-10 to13, it is difficult for us to comprehend that the power to set aside an exGparte award is not available to a Labour Court/Industrial Tribunal. Onthe principles of natural justice, and on a purposive interpretation of thescheme of the Act and Rules, we find it difficult also to discern that theratio of the decision inGrindlays(supra), is what is stated in paragraph-14 to the extent that an application for setting aside an ex parte award H

has to be filed within 30 days of publication of the award. On the contrary,the ratio inGrindlays(supra) is that the Tribunal can exercise its ancillaryand incidental powers, on the broader principles contained under OrderIX Rule 13 of the CPC. No doubt, the Limitation Act, 1963 is notapplicable to the Labour Court/Tribunal[8].

31. In Union of India and anotherv. Paras Laminates (P)Ltd9 this Court held that the legislature has intended and has concededcertain powers to the tribunals in their assigned field of jurisdiction forthe efficacious and meaningful exercise of their power. Such powersare implied in every tribunal unless expressly barred.

“8. There is no doubt that the Tribunal functions as a courtwithin the limits of its jurisdiction. It has all the powers conferredexpressly by the statute. Furthermore, being a judicial body, it hasall those incidental and ancillary powers which are necessary tomake fully effective the express grant of statutory powers. Certainpowers are recognised as incidental and ancillary, not becausethey are inherent in the Tribunal, nor because its jurisdiction isplenary, but because it is the legislative intent that the power whichis expressly granted in the assigned field of jurisdiction isefficaciously and meaningfully exercised. The powers of theTribunal are no doubt limited. Its area of jurisdiction is clearlydefined, but within the bounds of its jurisdiction, it has all the powersexpressly and impliedly granted. The implied grant is, of course,limited by the express grant and, therefore, it can only be suchpowers as are truly incidental and ancillary for doing all such actsor employing all such means as are reasonably necessary to makethe grant effective. As stated in Maxwell on Interpretation ofStatutes (11th edn.) “where an Act confers a jurisdiction, itimpliedly also grants the power of doing all such acts, or employingsuch means, as are essentially necessary to its execution”. [Seealso ITO v. M.K. Mohammed Kunhi].”

In J. K. Synthetics Ltdv. Collector of Central Excise10, whiledealing with a case from the Customs, Excise and Gold (Control) Appellate 8 M.P. Steel Corporation v. Commissioner of Centrral Excise (2015) 7 SCC 58; Nityananda, M. Joshi and others v. Life Insurance Corporation of India and others (1969) 2 SCC 199.

9 (1990) 4 SCC 453

10 (1996) 6 SCC 92

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ATribunal (CEGAT), this Court went a step further to hold that there arecertain inherent powers vested in every tribunal in regulating their ownprocedure. It held at paragraph-6 as follows:

“6. If, in a given case, it is established that the respondentwas unable to appear before it for no fault of his own, the ends ofBjustice would clearly require that the ex parte order against himshould be set aside. Not to do so on the ground of lack of powerwould be manifest injustice. Quite apart from the inherent powerthat every tribunal and court constituted to do justice has in thisrespect, CEGAT is clothed with express power under Rule 41 tomake such order as is necessary to secure the ends of justice.CCEGAT has, therefore, the power to set aside an order passed exparte against the respondent before it if it is found that therespondent had, for sufficient cause, been unable to appear.”

32. In case a party is in a position to show sufficient cause for itsabsence before the Labour Court/ Tribunal when it was set ex parte,Dthe Labour Court/Tribunal, in exercise of its ancillary or incidental powers,is competent to entertain such an application. That power cannot becircumscribed by limitation. What is the sufficient cause and whether itsjurisdiction is invoked within a reasonable time should be left to thejudicious discretion of the Labour Court/Tribunal.E

33. It is a matter of natural justice that any party to the judicialproceedings should get an opportunity of being heard, and if such anopportunity has been denied for want of sufficient reason, the LabourCourt/Tribunal which denied such an opportunity, being satisfied of thesufficient cause and within a reasonable time, should be in a position toFset right its own procedure. Otherwise, as held inGrindlays, an awardwhich may be a nullity will have to be technically enforced. It is difficultto comprehend such a situation under law.

34. In this context, it is also necessary to refer to Section 29, thepenal sanction which includes imprisonment for breach of award.

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G“29. Penalty for breach of settlement or award.- Anyperson who commits a breach of any term of any settlement oraward, which is binding on him under this Act, shall be punishablewith imprisonment for a term which may extend to six months, orwith fine, or with both, and where the breach is a continuing one,with a further fine which may extend to two hundred rupees forH

every day during which the breach continues after the convictionfor the first and the Court trying the offence, if it fines the offender,may direct that the whole or any part of the fine realised from himshall be paid, by way of compensation, to any person who, in itsopinion, has been injured by such breach.”

35. Merely because an award has become enforceable, does notnecessarily mean that it has become binding. For an award to becomebinding, it should be passed in compliance with the principles of naturaljustice. An award passed denying an opportunity of hearing when therewas a sufficient cause for non-appearance can be challenged on theground of it being nullity. An award which is a nullity cannot be and shallnot be a binding award. In case a party is able to show sufficient causewithin a reasonable time for its non-appearance in the Labour Court/Tribunal when it was set ex parte, the Labour Court/Tribunal is bound toconsider such an application and the application cannot be rejected onthe ground that it was filed after the award had become enforceable.The Labour Court/Tribunal is not functus officio after the award hasbecome enforceable as far as setting aside an ex parte award isconcerned. It is within its powers to entertain an application as per thescheme of the Act and in terms of the rules of natural justice. It needs tobe restated that the Industrial Disputes Act, 1947 is a welfare legislationintended to maintain industrial peace. In that view of the matter, certainpowers to do justice have to be conceded to the Labour Court/Tribunal,whether we call it ancillary, incidental or inherent.

36. We may also add that when an application for setting aside anex parte award is made at the instance of the management, the LabourCourt/Tribunal has to balance equities. The appeals are hence disposedof as follows. The awards are remitted to the Labour Court forconsideration as to whether there was sufficient cause for non-appearance of the management. Since the litigation has been pendingfor a long time, we direct the appellants to pay an amount of Rs.1,00,000/-in each case to the workmen by way of provisional payment. However,we make it clear that the payment is subject to the final outcome of theawards and will be adjusted appropriately. We record our deepappreciation for the gracious assistance rendered by Mr. ShekharNaphade.

Nidhi Jain Appeals disposed of.

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