Madhya Pradesh High Court
Aftab-E-Jadid, Urdu Daily ... vs Bhopal Shramjivi Patvakar Sangh ... on 29 August, 1984
Equivalent citations: (1985) ILLJ 272 MP
Author: C Sen
Bench: G Oza, C Sen
ORDER
C.P. Sen, J.
1. This is a petition under Articles 226 and 227 of the Constitution by the employer challenging the award given by the arbitrators under Section 10A of the Industrial Disputes Act, 1947 (hereinafter referred to as the Act).
2. Aftab-E-Jadid is an Urdu daily newspaper published from Bhopal and it employs certain journalists and other employees for running the paper. One Ishtiaq Arif was the Chief Editor of the paper and he tendered his resignation on 29th April, 1979. On 1st May, 1979 the Sub-Editor Sherqui Khalidi also tendered resignation. A notice was served on the employer by its union calling upon the employer to tender a public apology for misbehaviour with the Chief Editor and all the employees should be taken back on duty. Thereafter the workers resorted to hunger strike in front of the premises of the employer. The Assistant Labour Commissioner started conciliation proceedings by calling both the parties. On 11th May, 1979 the parties entered into an arbitration agreement in accordance with Section 10A of the Act. The respondents 2 to 4 Mulla Fakhruddin, Mammoon Hasan Khan and Khalil Ullah Khan were appointed arbitrators and the following disputes were referred for their arbitration:
(1) Whether the resignation of Mr. Ishtiaq Arif, Chief Editor, Aftab-E-Jadid tendered on 29th April, 1979 was voluntary or circumstances compelled him to resign?
(2) Whether the conditional resignation of Mr. Sherqi Khalil, Senior Sub-Editor, which he tendered in the light of Mr. Ishtiaq Arif's resignation has become effective or not?
(3) The employees of the establishment did not perform their duties in the context of Mr. Ishtiaq Arif's resignation. Whether it conformed to the dignity of the profession of journalism and justified under the prevailing situation?
Thereafter the arbitrators entered into a reference and called upon the parties to appear before them on 27th May, 1979. On that day, the respondent No. 1 on behalf of the employees filed their claim statement. Time was given to the employer to file their statement. On 6th June, 1979 a preliminary objection was raised by the employer saying that unless the arbitration agreement is published as required under Section 10A(3), the arbitration proceedings would be vitiated and the disputes referred are matters pertaining to the jurisdiction of the Labour Court under the Act and the agreement is contrary to the provisions of the Act. The respondent No. 1 filed their reply to the preliminary objection on 17th June, 1979.
On 7th July, 1979 the parties appeared before the arbitrators and it was agreed that further hearing in the arbitration proceedings would be held after publication of the arbitration agreement in the official gazette. However, a notice was given to the petitioner on 10th August, 1979 for filing a written statement by 20th August 1979. Since no statement was filed, a further notice was given on 27th August, 1979 and a meeting of the arbitrators was held on 2nd September, 1979 for taking further action, which was attended by all the three arbitrators and the respondent No. 1
The petitioner raised certain objections as to how a meeting has been called when it was already decided that further hearing would be after publication of the agreement in the gazette and the petitioner should be apprised as to whether the respondent No. 3 has been authorised by the other arbitrators to issue notices. The objection was overruled and it was decided to give a fresh opportunity to the petitioner to file its statement. A further registered notice was sent on 16th October, 1979 for hearing on 28th October, 1979. Despite the notice, the petitioner did not appear. The hearing on 28th October, 1979 was conducted by the respondent No. 3 alone. The respondent No. 2 had authorised him to receive the statement of the petitioner while the respondent No. 4 was absent. Amongst the parties, the respondent No. 1 appeared but the petitioner did not appear. This was recorded in the proceeding. A notice dated 9th January 1980 was served by the petitioner through his counsel on the arbitrators not to proceed with the arbitration as he was moving the Court. The respondents 2 and 3 alone gave an award on 15th September, 1980 holding that resignation of Ishtiaq Arif was not voluntary and as there was no written acceptance of the resignation, he continues to be in service. There was also no written acceptance of the resignation of Sub-Editor Sherqi Khalil. However, he was taken back in service along with three other workmen. The workers were justified in going on strike and the employees should be taken back to their duties. The award shall come into operation from 27th April, 1979. Copies of the award were sent to the Assistant Labour Commissioner who in turn sent the copies to the parties. The present petition has been filed before publication of the award on 2nd February 1981 and thereafter the award was published on 4th April, 1981. However, by order dated 11th August, 1981 this Court stayed further proceedings before the Assistant Labour Commissioner in compliance with that award.
3. The petitioner's case is that the Chief Editor tendered his resignation on 29th April, 1979 which was accepted on 30th April, 1979. In protest of his resignation, some more employees also tendered their resignations with effect from 1st May, 1979 which were accepted on 2nd May 1979.
There were conciliation proceedings before the Assistant Labour Commissioner and the disputes were referred to the arbitration of three arbitrators and they proceeded with the reference. In view of the objection of the petitioner, it was decided that the arbitration proceedings shall not commence till the agreement is published. In spite of such an agreement, the arbitrators went on giving notices to the petitioner for filing its statement. The petitioner raised further objection on 30th August, 1979. The agreement was published in the gazette on 28th September, 1979. The petitioner for the first time learnt from the letter of the Assistant Labour Commissioner on 6th December, 1980 that an award has been given by the respondents 2 and 3 alone without disclosing as to what was the opinion of the third arbitrator i.e. the respondent No. 4. The award is a nullity because (i) the arbitration agreement was not published within 30 days as required under Section 10A(3) which Ls mandatory and all proceedings before the publication are void and there was no notice given to the petitioner after publication in the gazette, (ii) the award does not disclose the date when it has been signed nor it discloses whether it was sent to the third arbitrator for his opinion. No reason has been disclosed as to why his signature was not taken on the award, and (iii) the arbitrators misconducted themselves by not giving any notice to the petitioner before proceeding ex parte.
4. The respondent No. 1 i.e. the employees in their return submitted that from the very beginning the petitioner refused to participate in the arbitration proceedings and raised all sorts of irrelevant objections although it was a party to the arbitration agreement. In spite of four registered notices given, the petitioner failed to appear on the dates of hearing, the last date was 28th October, 1979, although it was not legally necessary to give fresh notices. It was clear that the petitioner was not interested in the arbitration proceedings and somehow it wanted to get out of it. The arbitration agreement was duly published on 28th September 1979 and the requirement to publish the same within 30 days was merely directory. In view of the non-co-operative attitude of the petitioner, the arbitrators had no option but to proceed ex parte and pronounce the ex parte award. The third arbitrator who was the nominee of the employer i.e. the respondent No. 4. during the entire arbitration proceedings showed his disinterestedness and deliberately boycotted the proceedings. However, before signing the award, the two arbitrators i.e. respondents 2 and 3 called upon the respondent No. 4 to see the draft and give his assent or dissent. In spite of telephone calls and a personal messenger being sent, he refused to sec the award or give his opinion. So the award had to be given by the two arbitrators and the signature of the third arbitrator could not be taken and it being a majority award, the same is binding on the parties. The respondent No. 4 in his return submitted that he and respondent No. 3 were the arbitrators while the respondent No. 2 was the umpire. The respondent No. 4 participated in all the proceedings upto 2nd September, 1979 and thereafter he had no notice of the proceedings. The award was given behind his back. He was never informed of the award nor he was asked to give his opinion. As he has not participated in any arbitration proceedings after 2nd September, 1979, the further proceedings are vituated and there is no valid award.
5. The first question to be considered is what is the effect of non-publication of the arbitration agreement within 30 days as required under Section 10A(3) of the Act. A Division Bench of this Court in
Modern Stores v. Krishnadas 1970 Lab. & Indus, cases 196 held that the requirements of Section 10A(3) are partly mandatory and partly directory. On a true construction of the section, it is clear that although the first condition as regards the publication of an agreement in the Official Gazette is obligatory i.e. a sine qua mm, the other requirement, namely, of its notification within one month from its receipt, is only directory and not imperative. The same is the view taken in Landra Engineering and Foundry Works v. Punjab State 1969 Lab. & Indus Cases 52 (P & H) and in Mineral Industry Association v. Union of India 1971 Lab. & Indus. Cases 837 Delhi.
Reliance was placed on a decision of the Supreme Court in
Remington Rand of India v. The Workmen, 1968-I L.L.J. 542 that the provision contained in Section 17(1) of the Industrial Disputes Act, 1947 regarding publication of award within 30 days is directory and if the publication is beyond the fixed time, the award is not invalid. However, it appears that the Full Bench of the Madras High Court in R.K. Steels v. 'Their Workmen 1977-I L.L.J. 382 has held that non-publication of the agreement under Section 10A(3) would not invalidate the arbitration agreement but a Division Bench of that Court in Madras M.T. Manufacturers v. Spl. Dy. Labour Commr. 1980 (1) Lab. & Indus. Cases 329 explained the Full Bench decision by saying that it referred to the arbitration agreement and not to the award but non-publication of the agreement and the award would invalidate the award. However, another Division Bench of this Court in K.P. Singh v. S.K. Gokhale, 1970-I L.L.J. 125 has held that the procedure prescribed under Section 10A(3) is mandatory. In that case, neither the arbitration agreement was published nor the award. This Court did not consider the question whether the time of publication given in Section 10A(3) is mandatory or not. According to us, the time of publication given in Section 10A(3) is merely directory but the agreement has to be published before the award is given. This is because the award will be binding on all the parties and those who are not parties to the arbitration agreement must have notice of the agreement before the award is given. Under Section 10A(3A), who are not parties to the agreement have to be given an opportunity of presenting their case before the arbitrators. So the arbitration proceedings before publication of the arbitration; agreement on 28th September, 1979 are not vitiated, though after publication the persons who were not parties to the arbitration agreement could present their case before the arbitrators and there was no question of any de nova proceedings. So this objection has no merit.
6. The Supreme Court in
Engineering Mazdoor Sabha v. Hind Cycles Ltd. AIR 1963 SC 874 has held that though arbitrators are not a tribunal within the meaning of Article 136(1) of the Constitution but they being quasi-judicial authorities they are subject to writ jurisdiction of the High Court. In Rohtas Industries v. Its Union 1976-I L.L.J. 274 the Supreme Court has further held that in view of the amendment of Section 10A and other cognate provisions, the position has changed and it is legitimate to hold such arbitration as methodology of the sovereign's dispensation of justice. Recently, the Supreme Court in
Gujarat Steel Tubes Ltd. v. Its Mazdoor Sabha 1980-I L.L.J. 137 has held that "the High Court can interfere with an award of the arbitrator if that is based on a complete misconception of law or it is based on no evidence or that no reasonable man would come to the conclusion to which the arbitrator has arrived. The writ power is larger, given illegality and injustice, even if its use is severely discretionary." Subject to any limitations contained in the arbitration agreement and to any statutory direction as to the manner in which he has to discharge his duties, an arbitrator may conduct any proceedings in any manner he thinks fit so long as he acts in accordance with the principles of natural justice, equity and good conscience. Though the arbitrator is not bound by the procedure laid down either in the Code of Civil Procedure or by the strict rules of evidence but this does not mean that his procedure might be opposed to natural justice or he must disregard the rules of evidence which are founded on fundamental principles of justice and public policy. An arbitrator is also not bound to record the evidence in writing unless the terms of agreement so require. Under Section 10A of the Industrial Disputes Act there can be voluntary reference of disputes to arbitration where any industrial dispute exists or apprehended by written agreement entered into by the employer and the workmen. Section 11 prescribes that subject to any rules that may be made an arbitrator, a Board, Court, Labour Court, Tribunal or National Tribunal shall follow such procedure as the arbitrator or other authority concerned may think fit. In pursuance of Section 38 of the Act, the State of M.P. has framed M.P. Industrial Disputes Rules, 1957 which prescribes powers, procedure and duties. Part III of the Rules prescribes powers, procedure and duties of Conciliation Officers, Boards, Court, Labour Courts, Tribunals and Arbitrators. Under Rule 14 quorum for Board and Courts is two when the total number is three and Rule 27 prescribes decision by majority. In the present case, the arbitrators in their first meeting held on 27th May, 1979 decided that after filing of statement by both the parties the arbitrators would fix another date of hearing when the parties may produce evidence and witnesses if they want to produce the same. Therefore, it appears that the arbitrators decided to give opportunities to the parties to produce the evidence after filing of their statements. The petitioner was duly noticed and he did participate in the proceedings before publication of the arbitration agreement in the gazette though he raised certain preliminary objections. After publication of the agreement also he was noticed but he failed to appear and file his statement. But in the last notice of hearing dated 16th October, 1979 the petitioner was given one more chance for submitting statement on 28th October, 1979 which was going to be the last meeting in connection with the arbitration case. It was not mentioned therein that the evidence would be recorded on that date while earlier the arbitrators had decided to give a separate date for evidence after statements were filed.
Certainly the arbitrators were within their jurisdiction to proceed exparte against the petitioner as he failed to appear in spite of notice and submit his statement. It appears that on 28th October, 1979 only one of the arbitrators was present i.e. respondent No. 3 and he was authorised by the other arbitrator i.e. respondent No. 2 to accept the statement of the petitioner on his behalf also which shows that he only authorised the respondent No. 3 to accept the statement of the petitioner and nothing more. It does not appear that he was authorised to proceed ex parte against the petitioner. The proceedings which are recorded by the respondent No. 3 showed only what happened on that date without recording that the petitioner is being proceeded ex parte or the case is closed after hearing. The procedure which was adopted by the arbitrators require some evidence to be recorded of the respondent to prove their case before an award could be passed in their favour. They had only submitted their claim statement including therewith the statement of the Chief Editor Ishtiaq Arif in support. At no stage it was decided that the statements to be submitted by the parties would be treated as evidence. Therefore, on the basis of the statement alone an award could not have been given and it is vitiated, the error being apparent on the record.
7. Russell on Arbitration, 20th Edition, at page 234 has observed that on a reference to more than one arbitrator, when there is no provision for an award made by less than all being valid, each of them must act personally in performance of the duties of his office, as if he were sole arbitrator; for, as the office is joint, if one refuses or omits to act, the others can make no valid award. Such a provision is, however, implied, unless a contrary intention is expressed, whenever the arbitration agreement requires that there shall be three arbitrators the award of any two is then binding. A Division Bench of this Court in Janardhanprasad v. Chandrashekhar AIR 1951 Nag 198 has held as under:
For the making of an award, it is enough that the arbitrators act together and finally make up their minds and express their decision in writing. This writing must be authenticated by their signatures. The award is thus made and signed and is complete and final so far as the arbitrators are concerned. The giving of a written notice to either party is not essential to the making of an award.
The award is also bad because out of the three arbitrators only two have given the award. The respondent No. 4 who is the third arbitrator has denied that he had any notice of the arbitration proceedings after 2nd September, 1979. He did participate in the arbitration proceedings up to 2nd September, 1979. In the notice dated 16th October, 1979 which was sent to the petitioner by registered post there is a mention that copies were forwarded to the other two arbitrators. No acknowledgment of the respondent No. 4 has been produced that he had notice of the hearing on 28th October, 1979 nor there is any plea that he was so informed. So in the absence of any material to the contrary we have to accept the affidavit of the respondent No. 4 that he had no notice of the proceedings on 28th October, 1979. In the award, it is nowhere mentioned that the third arbitrator had refused to go through the award or give his opinion but in the forwarding letter of the respondent No. 3 to the Assistant Labour Commissioner he mentioned that in spite of repeated requests the respondent No. 4 has not given his opinion and so the majority award is being given. This is repeated in the return filed by the respondent No. 1 but since the third arbitrator had no notice of the proceedings after 2nd September, 1979 as has been held earlier, the award could not have been delivered by the other two arbitrators. If even after the notice the third arbitrator non-co-operated or refused to participate in the proceedings, the other two arbitrators would have been justified in proceeding with the arbitration and the majority award would have been binding on the parties. Even otherwise there are no proceedings drawn after 28th October, 1979 to show that the other two arbitrators thereafter conducted any joint hearing though it can be assumed that since the award is signed by both the arbitrators it is a joint award. There was no hearing as such on 28th October, 1979 and surprisingly enough the award has been given on 15th September, 1980 though there is no record of a further proceeding in between.
8. Accordingly, the petition is allowed and the award dated 15th September, 1980 published on 4th April, 1981 is set aside and the arbitrators are directed to decide the matter afresh within a period of three months after giving fresh opportunities to the parties to file further statements and lead evidence, if any. The parties are directed to appear before the arbitrators on 17th September, 1984. The record of the arbitration proceedings be returned forthwith. In the circumstances of the case, there shall be no order as to costs. The outstanding security amount be refunded to the petitioner.
