Holding

The demand for confirmation of workmen already acting in higher grades is an industrial dispute concerning classification by grades, and the Industrial Tribunal has jurisdiction to entertain it.

Summary

The workmen of Hindustan Lever Ltd. sought confirmation in the higher grades in which they had been acting for more than three months, claiming that they should be made permanent and receive retrospective benefits. The employer contended that the dispute was not an industrial dispute because it related to promotion, a managerial function, and thus the Industrial Tribunal lacked jurisdiction. The Tribunal accepted the employer’s view and dismissed the reference as incompetent. The Supreme Court held that the demand concerned classification by grades, a matter expressly covered by Entry 7 of the Third Schedule of the Industrial Disputes Act and the standing‑orders provisions, and therefore constituted an industrial dispute within the meaning of Sec. 2(k). Consequently, the Tribunal had jurisdiction, the preliminary rejection was set aside, the appeal was allowed, and the matter was remitted to the Tribunal for disposal on its merits.

Issues considered

Whether a demand for confirmation of workmen already acting in higher grades after a specified period constitutes an industrial dispute under Sec. 2(k) of the Industrial Disputes Act, 1947.
Whether the Industrial Tribunal has jurisdiction to adjudicate such a dispute under Sec. 7‑A and Entry 7 of the Third Schedule.
Whether promotion is a managerial function excluded from industrial adjudication.

Legislation cited

Industrial Disputes Act, 1947s. 2(k), s. 7-A
Industrial Employment (Standing Orders) Act, 1946s. 4

Subjects

industrial disputepromotionclassification by gradesstanding ordersindustrial tribunal jurisdictionconfirmation of acting employeesmanagerial functionIndustrial Disputes ActSection 2(k)Section 7-A

Judgment

WORKMEN EMPLOYED BY HINDUSTAN LEVER LTD • A
•
v.

HINDUSTAN LEVER LIMITED

August 28, 1984
B
[0.A. DESAI, V. BALAKR!SHNA ERADI AND V. KHALID, JJ.]

Industrial Disputes Act 1947, sec, 2(k)-Jnd11strial disputes-Den1and by
workmen for confirmation in the pron1oted posts-Whether industrial dispute-
Whether Industrial Tribunal has jurisdictjon to entertain such a demand.
c
Promotions-Whether giving pron1otion and confirmation in the promoted
posts is wholly a management funct;on.

Section 2(k) of the Industrial Disputes Act, 1947 (the Act, for short)
defines an 'industrial dispute' to mean any dispute or difference between
employers and employers, or betwee!n employers and workmen or between
workmen and workmen, which is connected with the emyloymcnt or non_ D
employment or the terms of cmployn1cnt or with the conditions of Jabour, of
any person. Section 7-A of the Act provides that the appropriate Government
may by notification in the Official Gazette constitute one or more Industrial
• Tribunal for the adjudication of industrial disputes relating to any n1atter
whether specified in the Second Schedule or the Third Schedule. Entry at
plecitum 7 in the Third Schedule reads •Classification by grades',
E
, Sec, 4 of the Industrial Employment (Standing Orders) Act, 1946 (1946
Act, for short) also requires the employer in an industrial establishment to
make provision in the standing orders for every matter set out in the Sche-
dule which is applicable to the industrial establishment. The Schedule pro..
vides, an1ongst others, for making provision in the standing orders for classi-
• fication of workmen for example, whether permanent, temporary apprentices,
F
probationers or badlis.

The Government of Maharashtra referred to the Industrial Tribunal a
dispute between appellants-workmen and the respondent-employer as to
• whether "Aii the employees who are acting continuously in higher grades for
more than three months should be confirmed in the respective grades imme.
diately and a11 the benefits should be given to the concerned employees with G
retrospective effect had they been confirmed imn1ediately after three months
of their continuous acting." The respondent raised a preliminary objection
that the dispute was not an industrial dispute \vi thin the n1caning of the ex-
pression in the Act, because if the dc111and as raised is conceded, it would
tantamount to allowing the work1ncn to decide the work force requiied in
various grades which is a mana~erial function, The Industrial Tribunal up. H
642 SUPREME COURT REPORTS [1985] I S.C.R. -{
A held the preliminary objection and rejected the Reference as incompetent
holding that the demand shorn of verbiage is one for promotion which is the
man.igerial 'i functiOn and therefore cannot be the subject matter of industrial
adjudication. Hence this appeal by special lc::ave. >

Allowing the appeal and remitting the matter to the Tribunal for dispos-
ing of the Reference on merits,
B
HELD : (1) It is well settled that certified Standing Orders under the
1946 Act which have a statutory flavour prescribe the conditions of service and
they shall be deemed to be incorporated in the contract of employment of each
workin3.0. with his employer. Since there is a statittOry obligation on the emp•
toyer in an 'industrial establishment' to cJassifi workmen under the 1946 Act,
the classification would be· permanent, temporary, apprentices, probationers
c and all other known categories, such as, acting, officiatingetc. In respect of the
classification, a dispute can conceivably arise between the employer and the
workmen because failure of the employer to carry out the statutory obJiga..
tion would enable the workman to question his action~ which will bring into
existence a disoute. It would become an industrial dispute 6ecause it would be
connected with the condition of employment. It becomes a condition of emp..
Ioyment because necessary conditions of serVice have been statutoriJy pre-
D scribed one such being classification of workmen. Therefore, without anything
more where the demand of the workmen was to confirm employees employed
in an acting capacity in a grade, it would unquestionably be an industrial
dispute. [646 C-G]

Sudhlr Chandra Sarkar .v. TaJa Iron & Steel Co, Ltd., [1984] 3 S.C.C.
- 269, referred to.
E
(2) Even if one does not reach the conclusion that the dispute raised
in question would be an industrial dispute by reference to the Standing
Orders certified under the 1946 Act, a mere reference to Entry 7 of the Third
Schedule read with Sec. 7-A would clinch the issue. Entry at plecitum 7 in the
. . . . '", Third Schedule reads ''Classification by Grades". If there is any dispute in
, '--........respect of classification by grades, it will necessarily be an industrial dispute.
F This would flow inctisputably from the language of section 1·A which provides
for setting uP of Industrial Tribunal for adjudication of_ industrial dispute
relating to an:Y matter specified, amongst others, in the Third· Schedule. In the
inst~~t case, the den1and of the workmen was for classification of the work-
men officiating in the higher ~rades eithef as permanent or temporary and
...
. they should· not be continued indefinitely :s temporary by making them per·
manent on rendering of continuous service in the higher grade for a period 0 f
three months. The demand involves both the classification of Cm.ployees arid
G ---- classification by grade. Therefore, the· Industrial Tribunal overlooked thi!
obvious fact situation by mis-interpreting the demand and reached a wholly
, untenable conclusion that the demand was for promotion which appeared to
- the Tribunal to be a managerial function and beyond the reach of adjudica-
tion. [647 C-E]

t3) Even on the footing of the Jaw as it stands at present in this country
H that promotion is a mana;;em-:nt function, the industrial dispute referred
WORKMEN v. HlNDUSTA Ll!VER LIMITED (Desai, J.) 643

to the Tribunal was not one for claiming promotion. The Tribunal comn1ittcd A
a grave error in so misinterpreting the dispute referred to it. The Tribun:i I
overlooked the fact that the demand was in respect of workmen already pro-
moted i.e. in respect of whom managerial function of selecting personnel for
• promotion .had been alreCdy performed. The demand was in respect of already
promoted workmen, may be in an officiating capacity, for their classification
from acting or temporary to confirmed, that is, perman.:nt, in the higher grade
to which they were promoted, after a reasonable period of service which accord- B
ing to the Union n1ust be three months of service. By no canon of construc-
tion this demand could be said to be one !or pron1otion. [550 B-D]

• Managen1ent of Brooke Bond Tndia (P) Ltd. v. Workmen [1966] 2 SCR
465 and The Hindustan lever Ltd. v. The Workmen [1974] 3 sec 510 ; held
inapplicable.

In the decisions of this Court in Management of Brooke Bond India (P)
c
Ltd, v. Workn1en [1966] 2 SCR 465 and The Hindustan Lerer Ltd. v.TheWorkmell
[1974'] 3 sec 510 it is assumed without controversy that promotion is a n1ana-
gerial function. But in view of the decision of this court in All India S.M. and
A.S.M.'s Assoc;a1;011 v. General Manager, Central Railway [1960] 2 SCR 311,
it is time to reconsider this archaic view of the /a;ssezfaire days that promo-
tion is a m:1nagement function. The expression ''terms and conditiolls of em-
ployment" would ordinarily include not only the contractual terms and condi- D
tions but those term' which are understood and appJied by the parties in prac-
tice or habitually or by common consent without ever being incorporated ln
tho contract. [649 E-G]

British Broadcasting Corporation v. Hearn & Others. [1978] 2 All E.R.
111 and R. Tndustrial Disputes Tribunal &Anr. v. Ex parte Queen Mary Co//e e
University of London, [1957] 2 AU E,R. 776, referred to. g E

• CIVIL APPELLATE JURISDICTION: Civil Appeal No. 179 of
1983.

Appeal by special leave from the Award dated the 13th·June F
• 1979 of the Industrial Tribunal, Maharashtra at Bombay in Ref (IT)
No. 453 of 1975.

Jitellder Sharma for the Appellant.

Dr. 'f.8. Chitale, 0.0. Mathur, 8. Kumar and Ms. M.era G
Mathur for the Respondent.

The Judgment of the Court was delivered by

DESAI, J · It is most unfortunate that all those ·iinhealtby and H
'.I
644 SUPREME COURT REPORTS [1985] l s.c.R.

A injudicious practices resorted to for unduly delaying the culmination
of civil proceedings have stealthily crept in, for reasons not un-
known, in the adjudication of industrial dispute for the resolution of
which an informal forum and simple procedure wero devised with •
the avowed object of keeping them free from the dilatory practices
of civil courts. Times without number this Court, to quote only
B two D.P. Makeswari v. Delhi Administration & Ors.( 1 ) and S.K. Verma
v. Mahesh Chandra & Anr.( 2 ) disapproved the practice of raising frivo-
lous preliminary objections at the instance of the employer to delay
and defeat by exhausting the workmen the outcome of the dispute
yet we have to deal with the same situat10n in this appeal by special
leave.
c •
The Government of Maharastra by its order dated October 22 ,
1975 referred a dispute between Hindustan Lever Ltd. ('employer'
for short) and the workmen employed by them for adjudication
under Sec. 10 of the Industrial Disputes Act, 1947 to the Industrial
Tribunal, Maharashtra. The schedule annexed to the order of re-
D ference specified the dispute as under :

"All the employees who are acting continously in
higher grades (as per annexure) for more than three months
•
should be confirmed in the respective grades immediately and
all the benefits should be given to the concerned employees
with retrospective effect had they been confirmed immedia-
E
tely after three months or their continuous acting."
•
After the workmen governed by the reference filed a statement
of claim, M/s Hindustan Lever Ltd., the employer, appeared and
contested the reference on diverse grounds: A preliminary objection
F was raised that the reference was incompetent because the dispute •
raised by the workmen and referred by the Government to the
Industrial Tribunal for adjudication was not an industrial dispute
within the meaning of the expression in the Industrial Dispute Act,
1947. Elaborating the contention, it was submitted that the dispute • "
is not an industrial disputes because if the demand as raised is con·
G ceded, it would tantamount to allowing the workmen to decide the
strength of the work force required in various grades and it is wc\l-
settled that determining and deciding the strength of work force

(1) [l983J 4 sec 293
(2l [1983J 4 sec 214
WORKMEN v. 11INDt1STAN LEVEi!. LIMITED (Desai, J.) 645

required in any industry is a managerial fu·etion. There were other A
contentions with which we are not concerned in this appeal at this
stage.

The Industrial Ttibunal held that whatever camouflage of the
language in which the demand is couched, the attempt is to
obtain promotion which cannot be claimed as a matter of right, it B
being a managerial function. The Tribunal in terms held that pro-
motion is the function of the management and the Industrial Tri-
bunal will have no power and jurisdiction to take away the func-
tion of the management and direct that such and such workmen
should be promoted to a particular post. Jn this view of the matter'
the Tribunal held that the dispute was not an industrial dispute
within the meaning of the expression and rejected the reference as c
incompetent. Hence this appeal by special leave.

Sec. JO( I) confers power on the appropriat' Government to
refer an existing or apprche!lded industrial dispute, amongst others,
to the Industrial Tribunal for adjudication. The dispute therefore,
which can be referrfed for adjudication, of necessity, has to be an D
industrial dispute which would clothe the appropriate Government
with power to make the reference and the Industrial Tribunal to
adjudicate it.

The expression 'Industrial dispute' is defined in Sec. 2(k) to
mean 'any dispute or difference between employers and employers or E
between employers and workmen, or between workmen and work-
men, which is connected with the employment or non-employment
or the terms of employment or with the conditions of labour, of
• any person'. The question is: whether a demand for confirmation in
the promoted post after a lapse of a certain time would be a dispute
which is connected with the terms of employment or the condition
F
of labour in the facts ond circumstance of this case ? The expression
'industrial dispute' has been the subject matter of numerous decissons
of this Court and the High Courts. The one feature common to
all the decisions is that the expressions has been so widely defined as
not to leave anything out of its comprehension and purview involving
• the area of conflict that may develop between the employer and the G
workmen and in respect of which a compulsory adjudication may
not be available. This is recognised to be the width and compre-
hension of the expression. Keeping in view this extensive defini-
tion, let us approach the contention in this appeal.

It cannot be gain said that the dispute is between the employer H
SUPREME COURT REPORTS tl985J 1 S.C.R.

A and their workmen. The question is : whether the dispute is con-
nected (leaving aside the words not necessary) with the terms of
employment of the workmen ?

Since the introduction of the Industrial Employment (Standing
Orders) Act, 1946 (1946 Act for short), it has be,en made obligatory
B for the employer in an industrial establishment to prepare a draft of
standing orders and get them certified under the Act. Sec. 4 of the
1946 Act requires the employer to make provision in the standing
orders for every matter set out in the Schedule which is applicable
to the industrial establishment. The Schedule provides amongst
others for making provision in the standing orders for classification
of workmen for example, whether permanent, temporary, apprenti-
c ces, probationers or badlis. This classification of workmen by the
employer is thus made obligatory and has to be provided for in the
standing orders. It is also well-settled that certified standing orders
which have a statutory flavour prescribe the conditions of service
and they shall be deemed to be incorporated in the contract of em-
ployment of each workman with his employer-S·udhir Chandra
D Sarkar v. Tata Iron & Steel Co. Ltd.( 1 ) It would therefore follow as
a corollary that the employer will have to classify the workmen and
failure to classify would be violative of the 1946 Act. Now if there
is a statutory obligation to classify workmen under the 1946 Act,
the classification would be permanent, temporary, apprentices, pro-
bationers and all other known categories such as acting, officiating
E
etc. In respect of the classification, a dispute can conceivably arise
between the employer and the workman because failure of the em-
ployer to carry out the statutory obligation would enable the work-
man to question his action which will bring into existence a dispute.
It would become an industrial dispute because it wouid be connec-
F ted with the conditions of employment. It becomes a condition of
employment because necessary conditions of service have to be sta-
tutorily prescribed, one such being classification of workmen. There-
fore, without anything mere where the demand of the workmen was
\!'
to confirm employees employed in an acting capacity in a grade, it
would unquestionably be an industrial dispute. This conclusion gets
G reinforced by a slightly different approach.
•'
Sec. 7-A of the Industrial Disputes Act, 1947 provides that

H c1> !1'841 3 sec 269
\VoR!(MEN v. HINDUSTAN LEVER LIMITED [Desai, J.] 647

the appropriate Government may by notification in the Official A
Gazette constitute one or more Industrial Tribunal for the adjudica-
tion of industrial dispute relating to any matter whether specified in
the Second· Schedule or the Third Schedule. Entry at plecitum 7 in
the Third Schedule reads 'Classification by Grades'. If there is any
dispute in respect of classification by grades, it will necessarily be an
industrial dispute. This was not only 11ot questioned but would B
fiow indisputably from the language of Sec. 7-A, which provides
for setting up of Industrial Tribunal for adjudication of industrial
dispute relating to any matter specified amongst others, in the Third
Schedule. Therefore, even if one does not reach the conclusion
that the dispute raised in question would be an industrial dispute by
reference to the standing orders certified under the 1946 Act, a mere c
reference to Entry 7 of the Third Schedule read with Sec. 7-A
would clinch the issue. Let it be recalled that the demand of the
workmen was for confirmation of employees promoted to the higher
gr.ade and acting in the higher grade for more than 3 months. In
other words, the demand was for classificatioR of the workmen
officiating in the higher grades either as permanent or temporary and
D
they should not be continued indefinitely as temporary by making
them permanent on rendering of continuous service in the higher
grade for a period of three months. The demand involves both the
classification of employees and classification by grade. Unfortuna-
tely, the Industrial Tribunal overlooked this obvious fact situation
by mis-interpreting the demand and reached a wholly untenable con- E
clusion that the demand was for promotion which appeared to the
Tribunal to be a managerial function and beyond the reach of ad-
judication.

It appears to have been contended before the Tribunal and
vigorously re-canvassed before us that removing the camouflage of F
language, the demand in terms seeks promotion to higher grade and
• promotion being a managerial function, the Ind~strial Tribunal had
no jurisdiction to entertain the same. The Tribunal after referring
to the decision of this Court in Management of Brooke Bond India

• • (P) Ltd. v. Workmen(') held that the demand shorn of verbiage is one
for promotion which is the managerial function and therefore
cannot be the subject matter of indnstrial adjudication. To recall
G

the words of the Tribunal, 'to seek confirmation of a workman in

(1) [ 1966] 2 SCR 46S H
648 SUPREME COURT REPORTS [1985] I S.C.R.

A a particular higher grade would mean a promotion as a confirmed
workman who is entitled to some of the benefits such as not being
removed from service without following certain P.rocedure or
promotion to higher post which benefits may not be available to a
temporary hand,' and this is nothing short of demanding promotion
which is a managerial function. We are unable to appreciate this •
B approach unwarranted in the facts and circumstances of this case,
because the decision in the Brooke Bond Case has to be understood~
in the context of the demand that was referred to the Industrial
Tribunal for adjudication. The demand was as under :
.
"All things being equal, seniority shall count for
c promotton. If the senior person has been overlooked in
the question of promotion, he is at liberty to ask the
concern for the reason why he has been overlooked, in
which case the concern shall give him the reasons, provided
that it does not expose the concern or the officer giving
reasons, to any civil or cri1ninal proceedings."
D
The Tribunal in that case after accepting that promotion was
a management function and had to be left to the discretion of the
management which had to make choice from amongst the
employees for promotion proceeded to hold that the action of
management in the facts and circumstances of the case was malafide.
E In appeal against this award of the Tribunal, a Constitution Bench
of this Court observed as under :

"Generally speaking, promotion is a management
function ; but it may be recognised that there may be
occasions when a tribunal may have to interfere with
F
promotions made hy the management where it is felt that
persons superseded have been so superseded on account of
mala fides or victimisation."
•

G
This view was also reiterated in the case of the present
employer in The llind"-'ltan Leve,. Ltd, v. The Workmen(') wherein the
Court observed that it was not disputed before them that ordinarily
. '

promotion is a management function.

H (I) [1975) 3 S.C.C. 510
WORKMEN v. HINDUSTAN LEVER .LIMITED (Desai, J.) 649

In the heyday of laissez faire and market economy, wage A
determination, hours of work, disciplinary measures including
quantum of punishment, in short prescribing all enveloping
conditions of service were the preserve of management, styled as
managerial functions. This relic of the past is slowly whithering
away since the introduction of the Constiturion ushering in socio-
. economic revolution through law. Most of the managerial functions
in relation to work force have been swept away by legislative
Bl

enac·ments enacted to give effect to Arts. 38, 39 and 41 of the
Constitution yet the Tribunal dug out from the bebris of the past,
the concept of managerial function and by a distorted construction
of the language of the reference comprehended it in the concept of
managerial function and denied to itself the jurisdiction to G
adjudicate it. In the process the Tribunol failed to take note of
the development of law since the decision in Brooke Bonrl. Case.

Since the decision of the Constitution Bench of this Court m
AU India. S.M. ann A.S.M.'s Association v. General Managei·,
Central Railwn.y' it is well-settled that equality of opportunity in
the matter of public employment guaranteed by Art. 16 (I) not only
ensures it at the time of entry in public employment but ensures it
even in the matter of promotion. If equality in the matter of
promotion is constitutionally guaranteed as the fundamental right, it
is time to reconsider this archaic view of the laissez faire days that
promotion is a management function. The whole gamut of labour

.. legislation is to check, control and circumscribe uncontrolled
managerial exercise of power with a view to eschew the inherent
arbitrariness in the exercise of such functions. In the decisions of
this Court it is assumed without controversy that promotion is a
managerial function. It may have to be re-examined in an appro-
• priate case. But it is not necessary to go so far in this case and we
would proceed on the assumption that the passing observation made
by the Constitution Bench in Brooke Bond case settled the law as far
as this country is concerned that promotion is a management
- If function though we would like to point out that the expression
'terms of conditions of employment' \\ould ordinarily include not
only the contractual terms and conditions but those terms which are
understood and applied by the parties in practice or habitually or
by common consent without ever being incorporated in the contract.
In England, it is settled law that promotion is comprehended in the

(I) (19601 2 SCR 311
650 SUPREME <;OURT REPORTS [1985] 1 s.c.R.

A expression' terms of employment of the employees.' In British
Broadcastin1: Corporation v. Hearn & others(•) and in R. lndnst?'ial
Di.•putes Tribunal & Anr. Ex parte Queen Mary College, University
~f London(') it was held that claim for promotion is connected with
terms of the employment of the employees.
•

Even on the footing of the law, as it stands at present in this
B country, that promotion is a management function, the industrial
dispute referred to the Tribunal was not one for claiming promotion.
The Tribunal committed a grave error in so mis·interpreting the
dispute referred to it. The Tribunal overlooked the fact that the
demand was in respect of workmen already promoted i.e. in respect
of whom managerial function of selecting personal for promotion
had been already performed. The demand was in respect of already
c promoted workmen, may be in an ofhciating capacity, for their •
classification from acting or temporary to confirmed that is perma-
nent, in the higher grade to which they were promoted, after a
reasonable period of service which according to the Union be three •
months of service. By no cannon of construction, this demand
could be said to be one for promotion. Therefore, the decision in
D Brooke Bond case and followed in the case of this very employer had
no application to the facts of this case and the Tribunal misdirected
itself in rejecting the reference on this narrow ground.
•
Accordingly, this appeal succeeds and is allowed and the
award of the Industrial Tribunal on the preliminary issue is quashed
and set aside and the matter is remitted to the Tribunal for dis-
posing of the reference on merits. As the matter is an old one and •
we were told that persons continuously officiating in the higher
grade for more than five years are not confirmed, the Tribunal is
directed to give top priority to the reference and dispose it of as
early as possible and not later than six months from today. The •
respondent shall pay the costs of the appellant quantified at
Rs. 2,000.

M.L.A. Appeal allowed.

(I) [1978] 2 All E.R. 111
(2) [1957] l All E.R. 776