Rohtas Industries Ltd v Rohtas Industries Staff Union (1976)

Two separate propositions, and examiners set both.

First, on remedies: an award by an arbitrator under s. 10A of the Industrial Disputes Act is amenable to certiorari under Art. 226. He is not a private arbitrator; he is part of the statutory machinery, and the High Court can supervise him.

Second, and more important: an illegal strike does not by itself make the workmen liable in damages to the employer. The consequences of illegality are those the Act prescribes — penalty, loss of wages, disciplinary action — and nothing more.

Without that second holding, every illegal strike would end in the financial destruction of the strikers, and the regulated right to strike would exist only on paper.

Rohtas Industries Ltd ran a large industrial complex at Dalmianagar in Bihar. Relations with the workmen's unions broke down and the workmen went on strike.

Instead of using the ordinary conciliation and reference machinery, the company and the unions entered into a written arbitration agreement under s. 10A of the Industrial Disputes Act 1947 — the provision allowing an employer and workmen to refer a dispute by agreement to an arbitrator of their own choosing rather than wait for a Government reference under s. 10.

Two of the questions referred were of substance: whether the strike was illegal, and whether the company was entitled to compensation from the workmen and their unions for the lost production and consequential financial injury.

The arbitrators held the strike illegal but refused the claim for compensation. The company challenged that part of the award in the High Court under Art. 226, failed, and appealed to the Supreme Court.

The posture on appeal is therefore the reverse of the usual one: the employer was attacking an award, and the workmen defending it.

1. Is an award of an arbitrator under s. 10A open to writ under Art. 226, or is it a private award outside the writ jurisdiction?
2. What is the scope of the arbitrator's authority under s. 10A?
3. Can an employer recover damages from workmen or their union for the loss caused by an illegal strike?

For the company. The strike was illegal; a wrong causing loss gives a right to compensation. The workmen and their unions, in combination, deliberately stopped production and inflicted heavy loss — the tort of conspiracy. The immunity in s. 18 of the Trade Unions Act 1926 cannot cover an act the Industrial Disputes Act itself declares illegal.

For the unions. The Act contains a complete code of the consequences of an illegal strike — s. 26(1) punishes the workman (one month and fifty rupees), s. 27 instigation, s. 25 financial aid, and the employer may dismiss after enquiry and refuse wages. Parliament chose those consequences and no others; civil damages are conspicuously absent. And conspiracy is not made out: the workmen combined to advance their own interests, not to injure the company.

The appeal was dismissed. The award refusing compensation stood.

1. On writ jurisdiction — the company won the point and lost the case. An arbitrator under s. 10A is amenable to Art. 226. He is not an ordinary consensual arbitrator: his authority to bind, the publication of his award by Government, and the award's statutory force all derive from the Act, not merely from the parties' agreement. He discharges a public function and is a "tribunal" for supervisory purposes, so certiorari lies. The Court distinguished Engineering Mazdoor Sabha v Hind Cycles Ltd (Supreme Court, 1963), which held a s. 10A arbitrator not to be a "tribunal" within Art. 136: Art. 226 is wider and differently worded, and a conclusion about Art. 136 does not govern it.

2. On the scope of the reference. The arbitrator's jurisdiction is bounded by the terms of the reference. He decides what is referred and nothing else, and decides it as an industrial adjudicator applying industrial law, not as a civil court applying contract alone.

3. On damages — the heart of the case. The workmen were not liable to compensate the employer for the losses caused by the illegal strike.

• The Act itself prescribes the consequences of an illegal strike, and they are penal and disciplinary, not compensatory. To read in a claim for damages would add a consequence Parliament did not enact.
• Liability in tort would have to rest on conspiracy, and under Crofter Hand Woven Harris Tweed Co Ltd v Veitch [1942] AC 435 (HL) a combination is actionable only where the predominant purpose is to injure the plaintiff rather than to advance the combiners' own legitimate interests. Here the predominant purpose was to press the workmen's own demands. There was no actionable conspiracy.
• Illegality under a labour statute does not convert an otherwise lawful combination into a civil wrong at the employer's suit.

4. On the limits of writ review. Having assumed jurisdiction, the Court declined to reappraise the arbitrators' findings: certiorari corrects jurisdictional error and error on the face of the record; it is not an appeal.

An award under s. 10A of the Industrial Disputes Act 1947 is made by a statutory authority and is subject to certiorari under Art. 226 even though the reference is consensual; and the illegality of a strike under the Act does not of itself create any civil liability in the workmen or their union to compensate the employer for the loss it causes, such liability requiring the ingredients of an actionable conspiracy, which are absent where the predominant object of the combination is the advancement of the workmen's own interests.

Both limbs are ratio: the first was necessary to entertain the challenge, the second decided it.

Obiter. Krishna Iyer J's wider reflections — that a law of torts built for individual wrongdoers should not be transplanted into collective labour relations, and that the beneficiaries of a damages award against strikers would ultimately be shareholders — are commentary. Worth a sentence, but not the ratio.

The damages holding rests on two independent legs, and you should give both. If one fails the other still stands.

Leg one: the statute is a self-contained scheme. The Industrial Disputes Act says exactly what an illegal strike attracts. Section 24 defines illegality by reference to ss. 22 and 23; s. 26(1) makes a workman who commences or continues an illegal strike liable to imprisonment up to one month, or a fine up to fifty rupees, or both; s. 27 deals with instigation and s. 25 with financial aid. Those penalties are trivial in money terms, deliberately so — Parliament was regulating conduct, not compensating loss. If a strike costing lakhs also carried a civil claim for that sum, the fifty-rupee fine would be an absurdity. The specific statutory consequence excludes the general one.

Leg two: conspiracy does not reach this case. Under the Crofter test, a combination that causes loss is actionable only if the predominant purpose was to injure. Where workmen combine to improve wages, hours or security, injury to the employer is a means of pressure, not the object. Illegality under the labour statute goes to the legality of the strike, not to the purpose of the combination, so it does not supply the missing ingredient.

A third strand is worth a line: s. 18 of the Trade Unions Act 1926 protected a registered union, its office-bearers and members from civil suit for acts done in contemplation or furtherance of a trade dispute, on the ground only that the act induces a breach of a contract of employment or interferes with trade or business. The company said that immunity cannot survive illegality; the Court did not have to resolve it, the claim having failed anyway. Cite it as reinforcement, not as the ground of decision.

The practical consequence. An employer faced with an illegal strike has three remedies, not four: prosecute under the penal sections, deduct wages for the strike period, and discipline after a proper domestic enquiry. He has no action for damages.

1. The limits of the immunity. Rohtas protects the workmen against liability for the strike as such, not for what they do during it. Violence, sabotage, damage to property and wrongful confinement of managerial staff remain independently actionable in tort and punishable as crimes, and no union immunity extends to them. Say this expressly; it is the standard follow-up question.

2. Discipline is unaffected. Participation in an illegal strike remains misconduct, but dismissal is not automatic. Indian General Navigation and Railway Co v Their Workmen (Supreme Court, 1960): mere participation does not justify dismissing every striker; the employer must charge-sheet individuals and hold a proper enquiry.

3. Wages are a separate question, governed by Syndicate Bank v K. Umesh Nayak (1994) 5 SCC 572 — payable only if the strike was both legal and justified.

4. The s. 10A point was carried further in Gujarat Steel Tubes Ltd v Gujarat Steel Tubes Mazdoor Sabha (Supreme Court, 1980), where an arbitrator under s. 10A was held to have powers co-extensive with a tribunal's, including the s. 11A power to substitute a lesser punishment for dismissal. Rohtas makes him a statutory adjudicator subject to the writ; Gujarat Steel Tubes gives him an adjudicator's remedial powers.

The case survives the repeal on both limbs.

The arbitration limb. Section 10A was repealed with the rest of the Act on 21 November 2025 by IR Code s. 104(1)(c). Its successor is IR Code s. 42, "Voluntary reference of disputes to arbitration", the whole of Chapter VI. The structure carries over intact — s. 42(1) the written agreement, s. 42(2) an umpire where the arbitrators are even in number, s. 42(5) a Government notification binding non-signatories where the signatories represent a majority of each side, s. 42(7) power to prohibit continuance of a strike once that notification issues.

Two features make Rohtas stronger under the Code than under the Act. Section 42(8) provides that nothing in the Arbitration and Conciliation Act 1996 applies to arbitrations under the section — a legislative statement that this is statutory, not private, arbitration. And s. 2(e) defines "award" to include an arbitration award made under s. 42. The Art. 226 reasoning therefore applies with greater force than before.

The damages limb. Nothing in the IR Code creates any civil liability in workmen to compensate an employer for an illegal strike, so the holding stands. Section 63 replaces ID Act s. 24 on illegality, s. 64 replaces s. 25 on financial aid, and the penalties are far heavier than fifty rupees: s. 86(13), worker commencing or continuing an illegal strike, one thousand to ten thousand rupees, or up to one month's imprisonment, or both; s. 86(15), instigation, ten thousand to fifty thousand rupees; s. 86(16), financial aid, the same scale.

One consequence is genuinely new: under Second Schedule Part II(1) with s. 84 and s. 86(5), advising, supporting or instigating an illegal strike is an unfair labour practice, fine ten thousand to two lakh rupees. Real added exposure — but still a penalty payable to the State, not compensation to the employer, so it confirms Rohtas rather than displacing it. And s. 16 reproduces the immunity of s. 18 of the Trade Unions Act 1926 unchanged.

Under the Code. IR Code 2020, s. 42 carries forward ID Act s. 10A as voluntary reference to arbitration; s. 42(8) expressly excludes the Arbitration and Conciliation Act 1996 and s. 2(e) treats the arbitration award as an "award" under the Code, both of which strengthen Rohtas on Art. 226. On damages the case is untouched: ss. 63 and 64 with the penalties in s. 86(13), (15) and (16) remain the only consequences of an illegal strike, and the Code creates no civil claim for the employer. Section 16 reproduces the union immunity of s. 18 of the Trade Unions Act 1926. The one substantive addition is that instigating an illegal strike is now also an unfair labour practice under Second Schedule Part II(1), punishable under s. 86(5).