Holding

Non‑publication of the arbitration agreement in the Official Gazette, as required by Section 10‑A(3), is a mandatory condition precedent; its omission vitiates the arbitral award, necessitating re‑determination after proper publication.

Summary

The workers' union (Karnal Leather Karamchar Sanghatan) and Liberty Footwear Company entered into a voluntary arbitration agreement under Section 10‑A of the Industrial Disputes Act, 1947. The arbitrators awarded reinstatement of 159 workers, but the employer challenged the award, arguing procedural irregularities and that the arbitration agreement had not been published in the Official Gazette as required by sub‑section 3 of Section 10‑A. The Punjab & Haryana High Court held the non‑publication rendered the award invalid and ordered its re‑determination after publication. On special leave, the Supreme Court examined whether the publication requirement is mandatory or merely directory and the effect of delayed publication. It concluded that the word “shall” makes publication a mandatory condition precedent; failure to publish vitiates the award, which must be re‑made after proper publication. The Court directed the State Government to publish the agreement, quashed the reference to the Industrial Tribunal under Section 10, and ordered the management to withdraw its letters‑patent appeal, disposing of the appeal.

Issues considered

Whether non‑publication of an arbitration agreement in the Official Gazette, as mandated by sub‑section 3 of Section 10‑A of the Industrial Disputes Act, 1947, renders the arbitral award invalid and unenforceable.
Whether the publication requirement under Section 10‑A(3) is a mandatory condition or a directory formality, and what are the consequences of delayed publication.

Legislation cited

Industrial Disputes Act, 1947s. 10, s. 10-A(1), s. 10-A(3), s. 10-A(4), s. 17, s. 17-A, s. 18
Industrial Disputes (Central) Rules, 1967s. Rule 7

Subjects

arbitrationindustrial disputespublication requirementofficial gazettemandatory vs directoryaward validitycollective bargainingIndustrial Disputes ActSection 10-AIndustrial Tribunal

Judgment

~ KARNAL LEATHER KARAMCHARI SANGHATAN
A
(REGD.)
~ v.
LIBERTY FOOTWEAR COMPANY (REGD.) & ORS.

>:.-\
AUGUST 31, 1989
"'j
1' B
[K. JAGANNATHA SHETrY AND A.M. AHMADI, JJ.]

.-· .,..
Industrial Disputes Act 1947-Sub-section 3 of Section JOA-
Publication of the arbitration Agreement in the Gazette-Whether
obligatory or directory and non'publication thereof-Whether renders
.~ the award invalid and unenforceable-Delay in publication-Effect of-
c
't Industrial Disputes (Central) Rules 1967-Rule 7.

'" Respondent No. 1 is a registered partnership firm which deals In
M leather footwears at Karilal In Haryana and at other piaces under the
"/ name and style of "Liberty Footwear Company". It had an industrial
dispute wiih his workmen; the latters' Union complaining that the D
management had terminated the services of more than 200 workmen.
The management asserted that the persons whose services had been
terminated were not its employees at the material time. The dispute
having remained nnsettled; the workmen went on strike as a result
"""' whereof the management had to lay off certain workers. The agitation
of the workers In front of the factory created a law and order problem E
and the police had to Intervene in the matter. With a view to bring
about a settlement, the official authorities such as Labour Commis'
sioner; Labour and Public Health Minister and other. Concerned offi'
cials all came alid extended their'good officers. They succeeded in their
..., efforts and on March 31,·1988, the parties entered into an agreement
containing the term8 of settlement of their dispute. It was agreed bet- F
ween them that a committee consisting of five persons, two from the
management and two from the workmen's union, with the Deputy
· Commissioner Kamal, as the. President should be constituted, as
arbitrators, to determine the dispute. The Committee gave its award on
29.4.1988 and 11.5.1988 directing the management to reinstate in all
159 workers. The management did not implement the award by rein- G
stating the workmen but instead challenged the validity of the award
~ by means of a Writ Petition before the High Court. The management
inter a/ia contended before the High Court that (i) the committee pro-
cedural irregularities; (ii) that the committee did not afford opportunity
to the management to produce evidence and (iii) that the arbitration
agreement. was not published in the official Gazette as required by J-t
1065

-;,,..r
1066 SUPREME COURT REPORTS [1989] 3 S.C.R.

Sub-section (3) of Section lOA of the Act and thus the award made
A without such publication was bad an" invalid. The High Court without
going into other contentions accepted the Writ Petition only on the
ground of non-publication of the agreement in the Gazette. It held that
the requirement of Sub-section 3 of Section IOA is mandatory and its
non-compliance would vitiate the award. It accordingly directed the
B State Government to publish the agreement in the Gazette and also
directed the committee tu determine the dispute afresh and pass the
award after the publication of the agreement.

The employees' Union has preferred this appeal after obtaining
Special Leave. In the meanwhile the management had preferred Letters
C Patent Appeal against certain directions of the Single Judge of the High
Court which is impugned in this appeal and the State Government has
referred the dispute to the Industrial Tribunal, Ambala, under section
IO(!) of the Act for adjudication.

Disposing of the appeal with directions this Court,
D
HELD: At both the places viz, in Sub-section (3) and Rule 7 of
the Industrial Disputes (Central) Rules, 1967, it may be noted that the
legislature has used the word "shall". In the context in which the word
has been, there is, little doubt about obligation to publish the agreement
in the official Gazette. [i075F]
E
It is now well established that the wordings of any provision are
not determinative as to whether it is absolute or directory. Even the
absence of penal provision for non-compliance does not lead to an infer-
ence that it is only directory. The Court, therefore, must carefully get
into the underlying idea and ascertain the purpose to be achieved 't'
F notwithstanding the text of the provision. [i076D]

The Act seeks to achieve social justice on the basis of collective
bargaining. Collective bargaining is a technique by, which dispute as to
conditions of employment is resolved amicably by agreement rather
than coercion. The dispute is settled peacefully and voluntarily
G although reluctantly between labour and management. The voluntary
arbitration is a part of infrastructure of dispensation of justice in the
industrial adjudication. The arbitrator thus falls within the rainbow of 1-
statntory tribunals when a dispute is referred to arbitration it is there-
fore necessary that the workers most be made aware of the dispute as
well as the arbitrator whose award would ultimately bind them. They
H must know what is referred to arbitration, who is their arbitrator, and
KARN AL LEATHER KARAMCHARI v. L.F. CO. 1067

what is in store for them. They must have an opportunity to share their
A
views with each other and if necessary to pface the same before the
arbitrator. This is the need for collective bargaining and there cannot
be collective bargaining without involving the workers. The Union only
helps the workers in resolving their disputes with management but
ultimately it would be for the workers to take decision and sug- ·
gest remedies. The arbitration agreement must therefore be published B
before the arbitrator considers the merits of the dispute.
Non-compliance of this requirement would be fatal to the arbital
award. [J076F-I077B]

r Iu the modern. welfare state, healthy industrial relations are a
matter of paramount importance. In attempting to solve industrial
disputes, industrial adjudication, therefore, should not be delayed. C
Voluntary arbitration appears to be the best method for settlement of
industrial disputes. [1077G]

The Court, therefore, gave the following directions:
D
(i) The State Government shall publish condition No. '3' in the
arbitration agreement in the Government Gazette within four weeks
from to-day; (ii) The agreement containing condition No. '3' stands
referred to the Industrial Tribunal, Haryana at Ambala for passing
arbitration award in accordance with law (iii) The reference made
under section 10(1) of the Act to Industrial Tribunal is quashed and (iv) E
The management shall withdraw the aforesaid Letters Patent Appeal
a!td the Writ Petition pending in the High Court within 3 weeks from
to-day failing which the High Court shall dispose them of as having
become infructuous. [l078D-F]

Romington Rand of India Ltd. v. The Workmen, [1968] I SCR 164; F
•) lvlodern Stores v. Krishnadas, AIR 1970 MP 17; Landara Engineering
and Fondary Works, Phillaur. v. The Punjab State & Ors., [1969] Lab.
I.C. 52; Mineral Industry Association v. The Union of India & Anr.,
AIR 1971 Delhi 160; Rasbehary Mohanty and Presiding Officer Labour
Court & Anr., [1974] II LLJ 01,issa 222 to 226; Workmen of Wood-
lands Hotel v. K. Srinivasa Rao, [1972] Vol. 42 F.J.R. 223 at 226; G
Kathyee Cotton Mills Ltd. v. District Labour Officer & Ors., [1981] I
LLJ Kerala 417 at 419, referred to.

CIVIL APPELLA1E JURISDlctlON: Civil Appeal No. 1765
of 1989.
H
1068 SUPREME COURT REPORTS [1989] 3 S.C.R.

From the Judgment and order dated 1.6.1988 of the Punjab and ~
A
HaryanaHigh Court in C.W.P. No. 4046of 1988.

A.K. Goel for the Appellants.

B.D. Agarwal, V. Ram Swamp, S.K. Bagga, S.R. Srivastava and .,.
B Ms. Anu Mohala for the Respondents.

c
The Judgment of the Court was delivered by

K. JAGANNATHA SHETTY, J. This appeal by leave from a
decision of the single Judge of Punjab & Haryana High Court raises a
very short but important question of law relating to the validity of an
"( -•
·arbitral award made before publishing the arbitration agreement -'(
under the Industrial Disputes Act, 1947 (The 'Act').

The facts which give rise to this appeal may briefly be stated
thus.
D
The respondent-1 is a registered partnership firm carrying on its
trading activities in leather footwears at Kamal and some other places
under the name and style of 'Liberty Footwear Company'. It has its ).
head office at Kamal in the State of Haryana. It had a serious dispute
with the workers. The workers' union complained that the manage-
E ment has illegally terminated more than 200 workers. The respondent-
1 denied that claim and asserted that the persons whose services were
alleged to have been terminated were not its employees at the material
time. This dispute however, remained unsettled and the workers went
on strike which took a violent turn. The management had to lay off
. certain workers and that added fuel to the fire. The agitation of the .
workers before the factory premises created law and order problem
r
F
attracting the police to intervene. The Labour Commissioner and
other top officials of the District arrived and they initiated conciliation
proceedings. The then Labour Minister and the Public Health Minister
of the State Government were also alerted. They also came and \"
extended their good offices to bring about a settlement. They
G succeeded in their efforts. On March 31, 1988, the parties entered into
an agreement containing the terms of settlement of their dispute. On
behalf of the management, the agreement was signed by respondents 1"
1, 7 and 8. On behalf of the workers, it was signed by the President and
Secretary of the workers' union. It was mutually agreed that a commit-
tee consisting of five persons, two from the management and two from
H the union with the Deputy Commissioner, Kamal as the President
KARNALLEATHERKARAMCHARI v. L.F. CO. (SHETIY,J.) 1069

>- should be constituted. They would be the arbitrators to determine the
said dispute .
A
..,
-) The committee of arbitrators was accordingly constituted. The
Committee gave its award on April 29, 1988 and May 11, 1988 direct-
ing the management to reinstate in all 159 workmen. This was the
~ beginning of another dispute which led to frustrated litigation. The B
management did not reinstate the workers. It challenged the validity
of the award by way of writ petition in the High Court. The award was
challenged in the first place on procedural irregularity committed by
...... f
the Committee of arbitrators. It was, inter alia, contended that the
Deputy Commissioner did not participate in the entire proceedings
and during his absence the administrator Municipal Committee Kamal
held the enquiry. It was also alieged that the Committee did not afford
c
)
opportunity to the management to produce evidence. Secondly, it was
claimed that the arbitration agreement was not published in the official
Gazette as required under suq-sec. (3) of Sec. lOA of the Act and the
award made without such publication would be invalid. The learned
single judge of the High Court who considered the matter did not D
examine all the contentions urged by the management. He, however,
accepted the writ petition only on the effect of non-publication of the
agreement in the Gazette. He expressed the view that the requirement
~ of the sub-sec. (3) is mandatory and its non-compliance would vitiate
the award. With this conclusion he quashed the award and directed the
State Government to publish the agreement in the Gazette. He also E
directed the Committee to determine the dispute afresh and pass an
award after publication of the agreement.

The employees' union without preferring Letters Patent Appeal
before the High Court against the judgment of learned single judge has
... directly appealed to this Court by obtaining special leave. Ordinarily, F
we would have revoked the leave since the party has not exhausted the
remedy available by way of appeal. But in view of the importance of
the question raised and the need to decide it promptly in the interest of
industrial adjudication, we proceed to consider the appeal on merits.

The principal question that arises for consideration is whether G
. non-publication of the arbitration agreement as required under sub-
..,_ sec. (3) of sec. 10-A, renders the arbitral award invalid and
unenforceable?

Before outlining the statutory provisions having a bearing on the
question, we may call attention to the relevant terms of the arbitration H
agreement.
1070 SUPREME COURT REPORTS [1989] 3 S.C.R.

"1. xxx xxx xxx xxx
A
2. xxx xxx xxx xxx

3. Out of alleged more than 200 terminated workers the
workers doing the work of cutting and sking are taken back
B with immediate effect and about the reinstatement of the
remaining workers a committee is constituted. In the Com-
mittee two members namely S/Shri Ishwar and Ram Badan
will represent the workers and S/Shri Sunil Bansal and
Mohan Lal Wadhwa will be the representatves of the
Management. The Deputy Commissioner, Karna! would
be the President of the Committee. This Committee will
c decide this matter that out of those alleged more than 200
workers whose services have been terminated how many
and who are workers of Liberty Group. The workers found
to be of the Liberty Group would resume work with
immediate effect. The Committee will take decision in this
D behalf upto 26th April, 1988. In order to ascertain as to
which of the workers worked in which factory of the
Liberty Group, the Presidnt shall have the right to adopt
any procedure or method and the decision given by him >·
shall be binding on both the parties."

E The parties entered into the abuve agreement and referred the
dispute for arbitration under se~. 10-A of the Act. Section 10-A is,
therefore, important and must be set out in full:

"10-A. Voluntary reference of disputes to arbitration-

F (1) Where any industrial dispute exists or is
apprehended and the employer and the workmen agree to
refer the dispute to arbitration, they may, at any time
before the dispute has been referred under sec. 10 to a
Labour Court or Tribunal or National Tribunal, by a writ-
ten agreement, refer the dispute to arbitration and the
G reference shall be to such person or persons (including the
presiding officer of a Labour Court or Tribunal or National
Tribunal) as an arbitrator or arbitrators as may be specified i-
in the arbitration agreement.

( 1-A) where an arbitration agreement provides for a re-
H ference to the dispute to an even number of arbitrators, the
KARNALLEATHERKARAMCHAR!v. L.F.CO. [SHETIY,J.] 1071

agreement shall provide for the appointment of another
person as umpire who shall enter upon the reference, if the A
arbitrators are equally divided in their opinion, and the
award of the umpire shall prevail and shall be deemed to be
the arbitration award for the purpose of this Act.

(2) An arbitration agreement referred to in sub-sec. ( 1) B
shall be in such form and shall be signed by the parties
thereto in such manner as may be prescribed.
'
(3) A copy of the arbitration agreement shall be forwarded
to the appropriate Government and the conciliation officer
and tlie appropriate Government shall, within (one month)
from the date of the receipt of such copy, publish the same c
in the Official Gazette.

(3,A) Where an industrial dispute has been referred to
arbitration and the appropriate Government is satisfied
· that the persons making the reference represent the majo- D
rity of each party, the appropriate Government may,
within the time referred to in sub-sec. (3), issue a notifica-
tion in such manner as may be prescribed; and when any
such notification is issued, the employers and workmen
who are not parties to the arbitration agreement but are
concerned in the dispute, shall be given an opportunity of E
presenting their case beore the arbitrator or arbitrators.

(4) The arbitrator or arbitrators shall investigate the dis-
pute and submit to the appropriate Government the arbit-
ration award signed by the arbitrator or all the arbitrators,
as the case may be. F

(4-A) Where an industrial dispute has been referred to
arbitration and a notification has been issued under
sub-sec. 3(a), the appropriate Government may, by order,
prohibit the continuance of any strike or lock out in connec-
tion with such dispute which may be in existence on the G
date of the reference."

It may be noted that Sec. 10-A excluding sub-secs. 1-A, 3-A and
4-A have been added to the parent Act by Act No. 36 of 1956. After
about eight years, sub-secs. 1-A, 3-A and 4-A came to be added by the
amending Act No. 36 of 1964. H

...
1072 SUPREME COURT REPORTS (1989] 3 S.C.R.

A Consequent upon the additions of these provisions, several cor- ~
responding changes were also made in the other provisions of the Act.
Section 2(b) which defines an award was amended by the addition of
the words "it includes an arbitration award made under sec. 10-A". As
a result of this amendment of the definition an arbitration award has
•
now become an award for all purposes of the Act attracting the applica-
B 'r
tion of secs. 17, 17-A, 18(2), 19(3), 21, 29, 30, 33-C and 36-A of the
Act.

It may be noted that secs. 23 and 24 as originally stood provided
power to the appropriate government to prohibit strikes and lock-outs,
._
but they could not be invoked in relation to proceedings before the "1
c arbitrator. So these sections were also amended to bring them in
harmony with sub-secs. (3-A) and (4-A) of sec. 10-A. Tµe Govern- --'{
ment could now by order prohibit continuance of any strike or lock-out
in connection with a dispute referred to arbitration and in respect of
,,
which a notification has been issued under sub-sec. 3-A.
D
Sub-section (4) of sec. 10-A empowers the arbitrator to investi-
gate and adjudicate upon the industrial dispute referred to him under
the arbitration agreement. He shall submit an award signed by him. If
there are more than one arbitrator, all of them must sign the award.
The award shall be submitted to the appropriate Government. It is >
also to be published like any other award under the Act in accordance
E with the provisions of sub-sec. (1) of sec. 17. Section 17-A provides
that an award (including an arbitration award) shall become enforce-
able on the expiry of 30 days from the date of its publication. Sub-sec.
(2) of sec. 18 makes an arbitration award which has become enforce-
able, binding on the parties to the agreement. Sub-section (3) of sec.
18 goes a step further. In a case where notification has been issued f
F under sub-sec. (3-A) of sec. 10-A, the arbitration award would be
binding on all parties to the dispute as well as on all other persons
summoned to appear in the proceedings as parties to the dispute. Such
an award will also bind the successors or assigns of the employer and
all present and future workmen employed in the establishment.
G For completeness of the picture we may refer to the rules framed
by the Central Government under sec. 38(2)(aa). These rules make
provision for the form of arbitration agreement, the place and time of ~
hearing and the powers of the arbitrator to take evidence. Rule 7 of
the Industrial Disputes (Central) Rules, 1957 which is relevant for our
purpose provides:
H
KARNALLEATHERKARAMCHAR!v. L.F.CO. [SHETIY,J.l 1073

"7. Arbitration Agreement-An arbitration agreement
A
for the ref~rence of an industrial dispute to an arbitrator
or arbitrators shall be made in Form C and shall be
"' delivered personally 9r forwarded by registered post to
the Secretary to the Government of India in the Ministry of
Labour (in triplicate), the Chief Labour Commissioner
(Central), New Delhi and the Regional Labour Commis- B
sioner (Central) concerned. The agreement shall be
accompanied by the consent, in writing, of the arbitrator or

- arbitrators."

In the light of these statutory provisions,. it is now necessary to
consider whether publication of the arbitration agreement is obliga-
tory and if so, when it should be published? To put the question more c
precisely: whether it is necessary to publish the agreement within the
time prescribed under sub-section (3) of sec. 10-A? And what would
be the consequences of delayed publication?

Arguments before us ranged a good deal wider than they appear D
to have done in the High Court. The counsel for the appellant claimed
that the publication in the Gazette is only for general information and
not a condition precedent for making the award. When parties have
voluntarily agreed and referred their problem to arbitration and also
participated in the award proceedings, mere non-publication of the
agreement cannot render the award invalid. Such a view, counsel E
asserted, would defeat the very purpose of industrial adjudication by
consent of parties. He also urged that penal consequence for non-
publication of the agreement since not prescribed, the requirement of
publication is only directory and not mandatory. He finally rmmded
off his submission by stating that the publication of the agreement is
necessary, but the period specified under sub-section(3) is only F
directory.

Before examining these contentions, it will be useful to have a
brief survey of the authorities referred to us at the Bar. In Ramington
Rand of India Ltd. v. The Workmen, [1968] l SCR 164, the question
arose whether the award published after the lapse of 30 days as G
specified in sec. 17( 1) would become invalid for non-publication within
the prescribed time. Mitter, J., speaking for a Bench of this Court
held that though sec. 17(1) makes it obligatory on the Government to
• publish the award, the time limit of 30 days prescribed therein, how-
ever, is merely directory and not mandatory. The learned judge
observed: H
1074 SUPREME COURT REPORTS [1989] 3 S.C.R.

"The limit of time has been fixed as showing that the publi- ~
A
cation of the award ought not to be held up. But the fixa-
tion of the period of 30 days mentioned therein does not
mean that the publication beyond that time will render the
award invalid. It is not difficult to think of circumstances
when the publication of the award within thirty days may
'r
B not be possible. For instance, there may be a strike in the
press or there may be any other good and sufficient cause
by reason of which the publication could not be made
within thirty days. If we were to hold that the award would,
therefore, be rendered invalid, it would be attaching undue
importance to a provision not in the mind of the legislature. "I
·-
It is well known that it very often takes a long period of
c time for the reference to be concluded and the award to be ~
made. If the award becomes invalid merely on the ground •
of publication after thirty days, it might entail a fresh ?;;
reference with needless harassment to the parties. The
non-publication of the award within the period of thirty
D days does not entail any penalty and this is a'lother consi-
deration which has to be kept in mind."

A Division Bench of Madhya Pradesh High Court in Modern
Stores v. Krishnadas, AIR 1970 MP 17 took the view that the publica- >
tion or arbitration agreement in the gazette is obligatory, that is, a sine
E qua non, but the requirement of time "within one month" is only
directory and not imperative. There the management entered into an
arbitration agreement with respect to a dispute with the Union on >
January 22, 1968. It was referred to the Presiding Officer of the
Labour Court, Jabalpur for arbitration. An award was made on March ·'
8, 1968 but it was not pronounced until April 15, 1968, for want of f
F publication of th~ agreement under sub-sec. (3) of sec. 10-A. The
agreement was published in the Gazette on March 29, 1968. The Court
however, quashed the award with a direction to the Presiding Officer
Labour Court to readjudicate the dispute referred under sec. 10-A of
the Act.

G A similar view was expressed by the Punjab & Haryana High
Court in Landara Engineering and Foundary Works, Phi/Laur v. The
Punjab State and Others, [1969] Lab. I.C. 52. ~

The Delhi High Court in Mineral Industry Association v. The '
Union of India and Another, AIR 1971 Delhi 160 has also accepted the
H same principle but by simply following the decision of the M.P. High
Court in Modern Stores case.
'

•, KARN AL LEATHER KARAMCHARI v. L.F. CO. {SHETTY, J.] 1075
,>...
The Orissa High Court in Rasbehary Mohanty and Presiding A
Officer Labour Court and Anr,, [ 1974] {ll) LLJ Orissa 222 at 226 has
held that if the arbitration agreement is not published as required
under sub-sec. (3), it would be an infraction of the statutory provisions
in' the matter of reference to the arbitrator and in the making of an
award.
·.
~ B
The Mysore High Court since called the Kamataka High Court
in Workmen of Woodlands Hotel v. K. Srinivsa Rao, [1972] Vol. 42

-- ,. F .J .R. 223 at 226 has observed that an award of the arbitration under
sub-section. (4) cannot be regarded as valid if the agreement for arbit-
ration is not published as prescribed under sub-sec. (3).
c
1- The Kerala High Court in Kathyee Cotton Mills Ltd. v. District
1(1" Labour Officer and Ors., [1981] 1 LLJ Kerala 417 at 419 has expressed
• the view that the requirements of sub-sec. (3) are mandatory and a
failure to comply with the provisions would vitiate the award.

The foregoing authorities of the High Courts do not indicate the 0
reasons in support of the views expressed. But the reasons in our
opinion, are not far to seek, and are immanent in the importance of
provisions of sub-section (3) and the object underlying thereunder.
~
We may read sub-section (3) along with Rule 7. Rule 7 states that the
arbitration agreement shall be made in form C and delivered person-
ally or forwarded by registered post to the Secretary to the Ministry of E
Labour and Chief Labour Commissioner etc. It shall be accompanied
by the consent, in writing, of the arbitrator or arbitrators. Sub-section
(3) also requires that a copy of the agreement shall be forwarded to the
appropriate government and the appropriate government shall, within
... one month from the date of receipt of such copy publish it in the
Official Gazette. At both the places it may be noted that the legisla- F
ture has used the word "shall". In the context in which this word has
been used, there is, in our opinion, little doubt about obligation to
publish the agreement in the Official Gazette. Counsel for the appel-
!ant also did not dispute this proposition.

The next question for consideratio;, is whether it should be. G
~
imperative to publish the agreement within the period of one month as
prescribed under sub-section (3). This is indeed not an easy question
for solution.

Maxwell tells us:
H
1076 SUPREME COURT REPORTS [1989] 3 S.C.R.

"That it is impossible to Jay down any general rule for
A
determining whether a provision is imperative or direc-
tory." [Maxwell on the Interpretation of Statutes 12th
Ed. p. 314].

Craies, however, gives us some guidelines:
B 'r
"When a statute is passed for the purpose of enabling
something to be done, and prescribes the formalities which

c
are to attend its performance, those prescribed formalities
which are essential to the validity of the thing when done
are called imperative or absolute; but those which are not
essential, and may be disregarded without invalidating the
thing to be done, are called directory." [Craeis on Statute
~
-
~
Law 5th Ed. p. 63).

D
It is now well established that the wording of any provision are
not determinative as to whether it is absolute or directory. Even the
absence of penal provision for non-compliance does not lead to an
-
inference that it is only directory. The Court, therefore, must carefully
get into the underlying idea and ascertain the purpose to be achieved
notwithsta~ding the text of the provision.
)..
Now look at the provisions of sub-section (3). It is with respect to
E time for publication of the agreement. But publication appears to be
not necessary for validity of the agreement. The agreement becomes
binding and enforceable as soon as it is entered into by the parties.
Publication is also not an indispensable foundation of jurisdiction of
the arbitrator. The jurisdiction of the arbitrator stems from the agree-
ment and not by its publication in the Official Gazette. Why then
F publication is necessary? Is it an idle formality? Far from it. It would
be wrong to construe sub-section (3) in the manner suggested by
counsel for the appellant. The Act seeks to achieve social justice on
the basis of collective bargaining. Collective bargaining is a technique
by which dispute as to conditions of employment is resolved amicably
by agreement rather than coercion. The dispute is settled peacefully
G and voluntarily although reluctantly between labour and management.
The voluntary arbitration is a part of infrastructure of dispensation of
justice, in the industrial adjudication. The arbitrator thus falls within
the rainbow of statutory tribunals. When a dispute is referred to arbit-
ration, it is therefore, necessary that the workers must be made aware
of the dispute as well as the arbitrator whose award ultimately would
H bind them. They must know what is referred to arbitration, who is
KARNALLEATHERKARAMCHAR!v. L.F.CO. [SHE1TY,J.] 1077
.~- their arbitrator and what is in store for them. They must have an
opportunity to share their views with each other nad if necessary to
A
place the same before the arbitrator. This is the rieed for collective
baigairiing and there cannot be collective bargaiiling without involving
the workers. The Union only helps the workers in resolving their dis'
i i putes with management but ultimately it wouid be for ihe workers ici
take decision and suggest remedies. It seems to us, therefore; that the B
arbitration agreement must be published before the arbitrator coliSi'

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ders the merits of the dispute. Non-compliance of ibis requirement
would be fatal to the arbitral award.

This takes us to the nature of ihe relief to be gfaiited iii tliis
appeal. The High Court has directed ihe Stale io pui:iiish ihe atbitra'
tiori agreement in the Government Gazette. It has further directed the c
.

d. Committee of arbitrators to determine the dispute only after its publi' -
Ii\; cation. But there are certain problems in this case to pursue that
course. The Deputy Commissioner who was the Chairman of the Com-
mittee of arbitrators has since resigned. It appears that he wants to run
away from his responsibility. The State Government has created a D
fresh problem. Under section 10( 1) of the Act, the State Government
has referred the dispute to the Industrial Tribunal, Ambala, for
.J.,, adjudication. That dispute relates to termination of 150 employees
, whose reinstatement was the subject matter of the arbitration agree-
ment. There is yet another problem from the-side of the management.

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Against the judgment of the learned single judge giving certain direc- E
tions, the management has preferred Letters Patent Appeal No, 511 of
1988 before a Division Bench of the High Court and obtained stay of
the directions. Not merely that; the management has also challenged
the reference made by the State Government under section 10(1) of
the Act. It has moved the High Court under Article 226 of the Con-
stitution with CWP No. 9455 of 1988 and obtained stay of further F
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proceedings before the Tribunal.

It must be recognised that in the modern welfare state, healthy
industrial relations are a matter of paramount importance. In atiempt'
irig to solve industrial disputes, industrial. adjudicaiion, therefore,
should riot be delayed. Voluntary arbitration appears to be the best G
)r method for settlement of industrial disputes. The disputes can be
resolved speedily and in less than a year, typically in a few months.
The Tribunal adjudication of reference under section 10( 1) often drags
on tor several years, thus defeating the very purpose of the industrial
~djudication. Arbitration is also cheaper than litigation with less legal
w':'rk and no motion practice. It has limited document discovery with H
1078 SUPREME COURT REPORTS [1989] 3 S.C.R.

quicker hearing and less formal than trials. The greatest advantage of
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arbitration is that there is no right of appeal, review or writ petition.
Besides, it may, as well reduce company's litigation costs and its
pote,1tial exposure to ruinous liability apart from redeeming the work-
men from frustration.

B This is with regard to advantages of voluntary arbitration. There
is another aspect which was perhaps not realised by the State Govern-
ment when it referred the dispute under section 10(1). Section 10 and
10-A of the Act are the alternative remedies to settle an industrial
dispute. An industrial dispute can either be referred to an Industrial
Tribunal for adjudication under section 10, or the parties can enter
into an arbitration agreement and refer it to an arbitrator under sec-
-
c tion lO-A. But once the parties have chosen their remedy under sec-
tion 10-A the Government cannot refer that dispute for adjudication
under section 10. The said reference macte by the Government under
section IO(l) cannot, therefore, be sustained.

D With these prefatory observations we make the following
directions:

(i) The State Government shall publish condition No. '3' in
the arbitration agreement in the Government Gazette within
four weeks from today. (ii) The agreement containing condition
E No. '3' stands referred to the Industrial Tribunal, Haryana at
Ambala for passing arbitration award in accordance with law;
(iii) The reference made under section 10(1) of the Act to the
Industrial Tribunal is quashed; and (iv) The management shall
withdraw the aforesaid Letters Patent Appeal and the Writ Peti- •
tion pending in the High Court within three weeks from today
F failing which the High Court shall dispose them of as having
become infructuous.

A copy of this judgment shall be transmitted forthwith to tbe
Industrial Tribunal Haryana at Ambala. The Tribunal after affording
opportunity to parties to produce evidence of their choice and also
G opportunity cross examine each other shall dispose of the matter
expeditiously, and at any rate not later than six months from the date
of first appearance of parties. The parties shall appear before the -1'
Tribunal on 15th September, 1989 to receive further direction.

The appeal is accordingly disposed of with no order as to costs.
H
Y. Lal Appeal disposed of.