Engineering Mazdoor Sabha v The Hind Cycles Ltd., Bombay (1962)

The Act offers two routes to a binding award: adjudication by a Labour Court or Tribunal on a reference by the appropriate Government under s. 10, and voluntary arbitration under s. 10A by a person the parties themselves choose. Since 1956 the s. 10A award is an "award" for most purposes of the Act. The question in this case is whether the two routes are also alike at the top — whether the Supreme Court can be approached by special leave under Art. 136 against an arbitrator's award as it can against a Tribunal's.

The answer is no, and the reason is the point worth learning: Art. 136 reaches a Tribunal, and what makes a body a Tribunal is not its procedure but its source of power. An Industrial Tribunal adjudicates because the State has invested it with the State's inherent judicial power. A s. 10A arbitrator adjudicates because the parties agreed that he should. Trappings of a court are not enough.

It is the leading Indian authority on the "trappings of a court" test and on the distinction between statutory adjudication and voluntary arbitration under the Act.

Three appeals were heard together because the respondents in each raised the same preliminary objection to competence.

Civil Appeals Nos. 182 and 183 of 1962. A dispute between the Engineering Mazdoor Sabha and another, and The Hind Cycles Ltd., Bombay, was voluntarily referred under s. 10A to Mr D.V. Vyas by the parties' agreement of 3 December 1959. The arbitrator entered upon the reference on 14 December 1959 and pronounced his award on 8 April 1960. The appellants challenged the validity and propriety of the award by special leave.

Civil Appeal No. 204 of 1962. The Anglo-American Direct Tea Trading Co. Ltd. challenged, again by special leave, the award pronounced on 27 August 1961 by Dr T.V. Sivanandam, to whom its dispute with its workmen had likewise been voluntarily referred under s. 10A.

In each case the respondent objected that the arbitrator was not a Tribunal under Art. 136, so that no appeal by special leave lay.

"whether an arbitrator to whom parties have voluntarily referred their disputes for arbitration is a Tribunal under Art. 136."

Article 136(1) confers very wide powers and its provisions "have to be liberally construed". Unlike Arts. 133(1) and 134(1), it is not confined to judgments, decrees or final orders of High Courts, and it may be exercised "even against an interlocutory order or decision". The restraint the Court exercises in refusing special leave is self-imposed in its discretion and is "not prescribed by Art. 136(1)".

But two conditions must be satisfied:

1. The proposed appeal must be from a judgment, decree, determination, sentence or order — "it must not be against a purely executive or administrative order". If the determination is judicial or quasi-judicial, this condition is met.
2. The determination "must have been made or passed by any Court or Tribunal in the territory of India".

"Unless both the conditions are satisfied, Art. 136 (1) cannot be invoked."

The first condition was satisfied and was not seriously disputed. Applying the distinction drawn in Province of Bombay v Kusaldas S. Advani (1950) — where an act is required to be done judicially by express provision or by necessary implication of the statute, the decision is quasi-judicial — the Court held that the decisions of arbitrators to whom industrial disputes are voluntarily referred under s. 10A "are quasi judicial decisions and they amount to a determination or order under Art. 136 (1)". What was in dispute, the Court said, was "not the character of the decisions against which the appeals have been filed, but it is the character of the authority which decided the disputes".

Article 136(1) refers to a Tribunal in contradistinction to a Court. A "Court" in the technical sense is a tribunal constituted by the State as part of the ordinary hierarchy of courts, invested with the State's inherent judicial powers. A Tribunal, as distinguished from a Court, exercises judicial powers and decides matters judicially or quasi-judicially without being a court in the technical sense; "according to the dictionary meaning, is a seat of justice; and in the discharge of its functions, it shares some of the characteristics of the court".

Two exclusions are stated at once. A domestic tribunal appointed in departmental proceedings or instituted by an industrial employer "cannot claim to be a Tribunal under Art. 136(1)", and "Purely administrative Tribunals are also outside the scope of the said Article".

The tribunals contemplated by Art. 136(1) "are clothed with some of the powers of the courts". They can compel the attendance of witnesses and administer oath, are required to follow certain rules of procedure, and their proceedings must comply with the rules of natural justice; they may not be bound by strict and technical rules of evidence, "but, nevertheless, they must decide on evidence adduced before them"; and though not bound by other technical rules of law, "their decisions must, nevertheless, be consistent with the general principles of law". In short, "they have to act judicially and reach their decisions in an objective manner and they cannot proceed purely administratively or base their conclusions on subjective tests or inclinations".

These procedural features and powers are what is sometimes described as the trappings of a court, and a rough and ready test is to ask whether the body is clothed with them.

But the trappings are not decisive. In Shell Company of Australia Ltd v Federal Commissioner of Taxation (1931) the Privy Council held the Board of Review not to be a court but an administrative tribunal. Lord Sankey LC observed that "an administrative tribunal may Act judicially, but still remain an administrative tribunal as distinguished from a Court, strictly so-called", and enumerated negative propositions: a tribunal does not become a Court "because it gives a final decision, or because it hears witnesses on oath, or because two or more contending parties appear before it between whom it has to decide". It is in that context that "the picturesque phrase 'the trappings of a Court' came to be used by the Privy Council".

The Indian line of authority supplies the governing test.

The Bharat Bank Ltd., Delhi v Employees of the Bharat Bank Ltd., Delhi (1950) — the decision the appellants relied on, because it concerned the very Industrial Tribunals constituted under this Act. The majority held that the functions and duties of the Industrial Tribunal are very much like those of a body discharging judicial functions, so that though it is not a Court "it is nevertheless a Tribunal for the purposes of Art. 136". Mahajan J there stated the condition precedent: a tribunal within the ambit of Art. 136 "should be constituted by the State", and a body "would be outside the ambit of Art. 136 if it is not invested with any part of the judicial functions of the State but discharges purely administrative or executive duties".

Durga Shankar Mehta v Thakur Raghuraj Singh (1955) — Mukherjea J, for a unanimous Court, held that "Tribunal" in Art. 136 is not the same as "Court" but includes "all adjudicating bodies", provided they are "constituted by the State and are invested with judicial as distinguished from purely administrative or executive functions". The same principle was reiterated in Harinagar Sugar Mills Ltd v Shyam Sunder Jhunjhunwala (1962).

Hence the test: whether the adjudicating body "has been invested by the State with its inherent judicial power" — which implies that it "should be constituted by the State and should be invested with the State's judicial power which it is authorised to exercise".

Section 10A, added by Act 36 of 1956, allows the employer and the workmen, where an industrial dispute exists or is apprehended, to refer it by written agreement to an arbitrator of their choice "at any time before the dispute has been referred under section 10". Sub-section (2) prescribes the form of agreement; (3) requires a copy to be forwarded to the appropriate Government and the conciliation officer, and the Government to publish it in the Gazette within fourteen days; (4) requires the arbitrator to "investigate the dispute" and submit the award to the appropriate Government; and (5) provides that "Nothing in the arbitration Act, 1940 shall apply to arbitrations under this section."

What was assimilated. Section 2(b) was amended so that "award" "includes an arbitration award made under section 10A". That drew in ss. 17, 17A, 18(2), 19(3), 21, 29, 30, 33C and 36A: publication and finality; enforceability thirty days after publication; binding force under s. 18(2); one year's operation; confidentiality and penalty; penalty for breach; the speedy money recovery under s. 33C; and interpretation under s. 36A.

What was not. Sections 23 and 24, which prohibit strikes and lock-outs, are inapplicable to proceedings before a s. 10A arbitrator — which "shows that the Act has treated the arbitration award and the prior proceedings in relation to it as standing on a different basis from an award and the prior proceedings before the Industrial Tribunals or Labour Courts". Under s. 20(3), proceedings before the arbitrator commence on the date of the reference of the dispute for arbitration, that is, before the appropriate Government has entered the scene at all. Rules under s. 38(2)(aa) regulate the form of agreement, place and time of hearing, taking of evidence, service of summons, ex parte procedure and correction of mistakes; the Central Rules seem to distinguish the arbitrator from the other authorities under the Act, while the rules of some States treat him on the same footing.

For the respondents (the Solicitor-General). Such an arbitrator "is no more and no better than a private arbitrator". He acts judicially, follows a fair procedure, takes evidence and decides on it; that is all a s. 10A arbitrator does. Just as a private award binds under the Arbitration Act, so this award binds under this Act. Against a private arbitrator no writ lies under Art. 226, much less an appeal under Art. 136; and on R. v Disputes Committee of the National Joint Council for the Craft of Dental Technicians (1953) Lord Goddard CJ held that certiorari and prohibition do not go to an arbitrator unless he acts under statutory powers — there being no instance "where certiorari or prohibition has gone to any arbitrator, except a statutory arbitrator, and a statutory arbitrator is a person to whom, by statute, the parties must resort". The parties here are not compelled to go to any person named by statute; he is an arbitrator of their choice.

For the appellants (Mr Pai). It is unreasonable to treat him as a private arbitrator: s. 10A gives statutory recognition to his appointment, and the consequential amendments and rules show he is clothed with quasi-judicial powers and regulated by rules of procedure. He is therefore a statutory arbitrator, against whom certiorari lies under Art. 226 — as The King v Electricity Commissioners (1924) and R. v Northumberland Compensation Appeal Tribunal, Ex parte Shaw (1951) show — and so he should be deemed a Tribunal for Art. 136 as well.

For the appellants (Mr Sule). On a fair construction of s. 10A the arbitrator cannot be distinguished from an Industrial Tribunal. The closing words, that "the reference shall be to such person or persons", mean that after the written agreement the reference is made by the appropriate Government to the person the parties have named; and it is that act of reference by the Government which invests him with the State's inherent judicial power.

The Art. 226 argument does not carry the appellants home. Article 226 "is, in a sense, wider than" Art. 136, because the power to issue writs "is not conditioned or limited by the requirement that the said writs can be issued only against the orders of Courts or Tribunals" — under Art. 226(1) a writ may go to any person or authority. So even if a writ might lie against a s. 10A award, that does not make its maker a Tribunal under Art. 136. (The Bombay High Court's decision in Air Corporation Employees' Union v D.V. Vyas (1961), holding such an arbitrator amenable to Art. 227, was distinguished: it did not appear that the construction of s. 10A had been argued, nor that the Court's attention had been drawn to the differences between s. 10A and s. 10 or to the tests for a Tribunal.)

He is not quite a private arbitrator — and that changes nothing. It may be conceded that he "cannot be treated to be exactly similar to a private arbitrator"; he is clothed with certain powers, his procedure is regulated, and his award is given statutory validity and binding character for a specified period. To that extent he may "in a loose sense" be described as a statutory arbitrator. "But fact that the arbitrator under s. 10A is not exactly" "in the same position as a private arbitrator does not mean that he is a tribunal under Art. 136. Even if some of the trappings of a Court are present in his case, he lacks the basic, the essential and the fundamental requisite in that behalf because he is not invested with the State's inherent judicial power."

The construction of s. 10A is against Mr Sule. "The section is not very happily worded", but its scheme is not in doubt. Grammatically, the last clause means that once the written agreement specifies the person or persons, the reference shall be to them; "We do not think that on the words as they stand, it is possible to introduce the Government at any stage of the operation of s. 10A (1)." The prescribed form under s. 10A(2) confirms it: the parties state that they have agreed to refer the subsisting dispute to the arbitration of the persons named, specify the matters in dispute, and agree that the majority decision shall bind them; the form "is exactly similar to the arbitration agreement". Publication of the copy under sub-s. (3) "is, in a sense, a ministerial act and the appropriate Government has no discretion in the matter". When sub-s. (4) directs the arbitrator to investigate the dispute, "it merely asks the arbitrator to exercise the powers which have been conferred on him by agreement of the parties under s. 10A(1)".

The contrast with s. 10(2) is decisive. Where parties jointly apply under s. 10(2), the appropriate Government, if satisfied that the applicants represent the majority of each side, must refer — but "the significant fact is that the reference has to be made by the appropriate Government and not by the parties", whereas under s. 10A the reference is by the parties to their own nominee, and the Government steps in afterwards only to assist the further proceedings. Section 18(2) points the same way: it speaks of the parties to the agreement as "the parties who have referred the dispute to arbitration", which "indicates that the act of reference is not the act of the appropriate Government, but the act of the parties" themselves. And s. 10A(5) would have been unnecessary had the Government made the reference; its presence suggests, in the Court’s words, that "the proceedings contemplated by s. 10A are arbitration proceedings to which, but for sub-s. (5), the Arbitration Act would have applied".

The anomaly is acknowledged, and left to Parliament. Mr Sule urged that the policy of s. 10A — to encourage parties to avoid bitterness by choosing their own arbitrator — would be defeated if the award escaped scrutiny under Art. 136, and that it is anomalous for the aggrieved party to lose both the protections of the Arbitration Act and the appellate jurisdiction of the Supreme Court. "There is some force in this connection." The Legislature "probably did not realise that the position of an arbitrator contemplated therein would become anomalous" once he was neither assimilated to an Industrial Tribunal nor left under the Arbitration Act. "That, however, is a matter for the Legislature to consider."

1. The decision of an arbitrator to whom an industrial dispute is voluntarily referred under s. 10A is quasi-judicial in character and amounts to a determination or order under Art. 136(1) — the first condition of Art. 136 is satisfied.
2. He is nevertheless not a Tribunal within Art. 136, "because the State has not invested him" with its inherent judicial power, "and the power of adjudication which he exercises is derived by him from the agreement of the parties". "His position, thus, may be said to be higher than that of a private arbitrator and lower than that of a tribunal."
3. Consequently no appeal lies under Art. 136 against a s. 10A award. The preliminary objection was upheld and the appeals dismissed as incompetent. The appellants in C.A. No. 204 of 1962 were to pay the respondents' costs; no order as to costs in C.A. Nos. 182 and 183 of 1962.
4. Semble: Art. 226 is wider than Art. 136, since the writ jurisdiction is not limited to orders of courts or tribunals; a writ may therefore lie against such an award in an appropriate case.

An adjudicating body falls within "Tribunal" in Art. 136 only if it is constituted by the State and invested with the State's inherent judicial power; the trappings of a court, however many, cannot supply that requisite. An arbitrator under s. 10A of the Industrial Disputes Act derives his power to adjudicate from the parties' agreement and not from the State, and so is not a Tribunal under Art. 136, notwithstanding that his award is an award for most purposes of the Act.