Bharat Bank Ltd. Vs Employees of Bharat Bank Ltd

# Bharat Bank Ltd. v. Employees of Bharat Bank Ltd. — An Analytical Study of the Foundational Ruling on Article 136 and Industrial Tribunals

## Introduction

*Bharat Bank Ltd.* v. *Employees of Bharat Bank Ltd.*, reported at 1950 SCC 470, is one of the earliest and most significant pronouncements of the Supreme Court of India on the scope of its special leave jurisdiction under Article 136 of the Constitution. Decided within months of the Constitution coming into force, the case squarely raised the question of whether an award of an Industrial Tribunal — a body created by ordinary legislation to resolve disputes between employers and workmen — could at all be brought before the Supreme Court by way of special leave to appeal. The judgment is equally significant for its extended discussion of what distinguishes a "court" or "judicial Tribunal" from a body exercising merely administrative or quasi-judicial functions, a distinction that continues to inform administrative law in India. Delivered by five judges with three separate opinions and a partial dissent, the case set out the framework within which the Supreme Court would, for decades thereafter, approach appeals from Tribunals of every description.

## Factual and Procedural Background

The appellant, Bharat Bank Ltd., a Delhi-based banking company registered under the Companies Act, faced demands from its employees which were met with an unfavourable response. This led to a strike by the employees on 9-3-1949. The Bank responded by serving notices calling upon the striking employees to resume work, and when they failed to do so, discharged a number of them between 19th and 24th March 1949.

The Central Government, acting under Section 7 of the Industrial Disputes Act, 1947, constituted a Tribunal of three persons — the All-India Industrial Tribunal (Bank Disputes) — to adjudicate industrial disputes concerning banking companies. Various disputes were referred to this Tribunal under Section 10 of the Act, including, under Item 18 of Schedule II of the notification, the question of "retrenchment and victimisation" concerning specific cases to be cited by the employees.

The dispute between Bharat Bank and its employees under Item 18 was heard by the Tribunal at Delhi. Although the entire hearing had taken place before all three members of the Tribunal, one member — who had in the meantime been appointed to the Boundary Commission in Bengal — did not sign the award. The award was accordingly signed by only two of the three members and made on 19-1-1950. It was published in the Government of India Gazette on 4-2-1950 and was declared binding for a period of one year under Section 15 of the Industrial Disputes Act, 1947. By this award, the Tribunal directed reinstatement of a number of dismissed employees.

Aggrieved, Bharat Bank sought and obtained special leave to appeal to the Supreme Court under Article 136 of the Constitution — this being the first occasion on which special leave was granted against the determination of an Industrial Tribunal. The Bharat Bank Employees' Union, Delhi, and the Union of India (as the authority responsible for constituting the Tribunal and declaring the award binding) intervened in the appeal. A preliminary objection to the maintainability of the appeal was raised on behalf of the respondents and the Union of India.

## Dispute Before the Court

Two distinct sets of questions arose for the Court's determination.

**The preliminary objection (maintainability):** Could an appeal lie at all, under Article 136, against the award of a body such as an Industrial Tribunal? The respondents and the intervening Union of India contended that:

- An Industrial Tribunal does not perform a judicial or quasi-judicial function in the strict sense, since it is not bound by any recognised substantive law and, in adjudicating industrial disputes, it can override existing contracts and create new rights.

- The Tribunal's adjudication lacks the essential attributes of a judicial decision because it does not bind the parties until the appropriate Government declares it binding under Section 15 of the Industrial Disputes Act — making it, in substance, more akin to an advice or report than a determination.

- Article 136, even though couched in the widest language, was never intended to cover a body that does not exercise the judicial power of the State; the Industrial Tribunal, being essentially an administrative body performing quasi-judicial functions, falls outside its purview.

- In any event, the ordinary and adequate remedy against jurisdictional excess by such a Tribunal was a writ of certiorari before the High Court, not a special leave petition to the Supreme Court.

Bharat Bank, in reply, argued that the Industrial Tribunal, when examined by reference to its actual composition, procedure and powers, functions as a court exercising judicial power, and that in any case the language of Article 136 — referring broadly to "any judgment, decree, determination, sentence or order in any cause or matter passed or made by any court or Tribunal" — was wide enough to bring within its ambit the award of any Tribunal, judicial or not.

**The merits (assuming the appeal was maintainable):** If the appeal did lie, four grounds were urged for interference with the Tribunal's award: (i) that the Tribunal had misconstrued the word "victimisation" so as to assume jurisdiction over matters not properly referred to it; (ii) that the Tribunal erred in ordering reinstatement of employees involved in what was said to be an illegal strike; (iii) that the award was based on no evidence, the allegations of victimisation being unsupported by affidavit or evidence, in violation of natural justice; and (iv) that the award, having been signed by only two of the three members of the Tribunal though the entire hearing took place before all three, was invalid for non-compliance with Section 16 of the Industrial Disputes Act, 1947.

## Reasoning and Analysis of the Court

### The nature and scope of Article 136

The Court unanimously recognised that the language of Article 136 is exceptionally wide. The Article opens with a non-obstante clause ("Notwithstanding anything in this Chapter") and empowers the Supreme Court, in its discretion, to grant special leave to appeal from "any judgment, decree, determination, sentence or order in any cause or matter passed or made by any court or Tribunal in the territory of India" — subject only to the express exclusion, in clause (2), of orders of courts or Tribunals constituted under any law relating to the Armed Forces.

It was noted that Article 136 departs materially from the appellate provisions that precede it. Articles 132, 133 and 134, dealing respectively with constitutional, civil and criminal appeals, are confined to appeals from a "judgment, decree or final order" (or "sentence") of a "High Court." Article 136, by contrast, uses the word "order" without the qualifying word "final," and refers to "any court" rather than the High Court alone; it further introduces two new expressions absent from the earlier Articles and from the corresponding provision of the Judicial Committee Act, 1844 — "determination" and "Tribunal." These additions were held to widen substantially the class of orders and bodies from which an appeal could be brought, extending even to interlocutory orders and to Tribunals that are not courts in the strict, traditional sense.

### Whether an Industrial Tribunal is a "Tribunal" within Article 136

The leading opinion, with which the majority concurred on this point, held that before an appeal can lie to the Supreme Court from a Tribunal, that Tribunal must perform some kind of judicial function and possess, to some extent, the trappings of a court. Examining the constitution and procedure of the Industrial Tribunal under the Industrial Disputes Act, 1947, and the Rules framed thereunder, the Court found the following features significant:

- Proceedings before the Tribunal commence on an application in the nature of a plaint (Rule 3).

- The Tribunal possesses the same powers as a civil court under the Code of Civil Procedure in respect of discovery, inspection, adjournment, reception of evidence on affidavit, enforcement of attendance of witnesses, and production of documents (Section 11(3); Rule 21).

- Every enquiry or investigation by the Tribunal is deemed a judicial proceeding within the meaning of Sections 193 and 228 of the Penal Code, 1860, and the Tribunal is deemed a civil court for the purposes of Sections 480 and 482 of the Criminal Procedure Code, 1898.

- Parties have the right of examination, cross-examination and re-examination of witnesses, and of addressing the Tribunal after all evidence has been called (Rule 21), and may be represented by legal practitioners with permission (Rule 30).

- The Tribunal's function is essentially adjudicatory: there must be two or more parties before it with conflicting cases, and it must reach a conclusion as to how the dispute is to be ended.

On the objection that the Tribunal is not bound by any recognised substantive law and can override contractual rights, the Court held this to be no different in principle from other special courts (such as those under moneylending or encumbered-estates legislation) which are also empowered to override contracts while administering a special statute; what matters is that the Tribunal must observe the law it is required to administer, and an appellate court can always verify that this special law and procedure have not been departed from arbitrarily.

On the more serious objection — that the Tribunal's award has no binding force until declared so by the appropriate Government under Section 15(2) of the Industrial Disputes Act, 1947 — the Court held that Section 15(2) leaves no discretion with the Government: it is bound to declare the award binding once made (save in the special case, under the proviso, where the Government is itself a party). The Government's declaration was accordingly held to be automatic and ministerial rather than an independent exercise of will; the substantive determination of rights is made by the Tribunal itself, and the Government's order merely operationalises it. Reliance was placed on the English decision in *R.* v. *Electricity Commissioners, ex p London Electricity Joint Committee Co. (1920) Ltd.*, (1924) 1 KB 171 (CA), where a similar objection — that the Commissioners "came to no decision at all" because their scheme required confirmation by the Minister of Transport and approval of both Houses of Parliament — was rejected; the Court held that a proceeding does not cease to be judicial merely because it is subject to subsequent confirmation or approval. The further fact that the Industrial Tribunal's decisions are always liable to correction by the High Court through a writ of certiorari (a point conceded by counsel for the intervening Union of India) was treated as itself an indication that the Tribunal exercises functions of a judicial character amenable to appellate/supervisory control, and hence falls within the ambit of "Tribunal" in Article 136. Reliance was also placed on *R.* v. *Minister of Health, ex p Yaffe*, 1931 AC 494 (HL), and *R.* v. *Minister of Health*, (1939) 1 KB 232 (CA), to the same effect — that the need for ministerial confirmation of an order does not deprive it of its character as a decision open to judicial review.

A concurring opinion elaborated further on the constitutional purpose of Article 136, holding that its language is of a comprehensive and overriding character, that the omission of the word "final" before "order" shows that even interlocutory orders may attract special leave, and that the introduction of the word "Tribunal" (absent from the Judicial Committee Act, 1844) was deliberate — intended to bring within the Supreme Court's reach Tribunals which, while not courts in the strict, technical sense, are nevertheless "adorned with similar trappings as court." Reliance was placed on *Shell Co. of Australia Ltd.* v. *Federal Taxation Commr.*, 1931 AC 275 (PC), for the proposition (per Lord Sankey) that there exist Tribunals possessing many of the trappings of a court which are, nonetheless, not courts in the strict sense of exercising judicial power — and on the celebrated definition of "judicial power" given by Griffith, C.J. in *Huddart, Parker & Co.* v. *Moorehead*, (1909) 8 CLR 330, 357 (Aust.), namely, the power which every sovereign authority must possess to decide controversies between its subjects, exercised whenever some Tribunal with power to give a binding and authoritative decision is called upon to take action. It was further held, drawing on *R.* v. *London County Council, ex p Entertainments Protection Assn. Ltd.*, (1931) 2 KB 215 (CA), that it is not necessary for a body to be a court in the strict sense so long as it exercises, after hearing evidence, judicial functions in the sense of deciding on evidence between a proposal and an opposition. A detailed examination of the provisions of the Industrial Disputes Act, 1947 and the Rules made thereunder (particularly Sections 7, 8, 11, 15 and 38, and Rules 3, 13, 14, 17, 19 and 21) led to the conclusion that the Industrial Tribunal has all the necessary attributes of a court of justice and no function other than adjudication, notwithstanding that the scope of the powers conferred on it (for instance, to override or modify existing contracts) is wider than that ordinarily possessed by a civil court. The decisions in *Waterside Workers' Federation of Australia* v. *J.W. Alexander Ltd.*, (1918) 25 CLR 434 (Aust.); *Rola Co. (Australia) (Pty.) Ltd.* v. *Commonwealth*, (1944) 69 CLR 185 (Aust.); and the Privy Council decisions in *Shell Co. of Australia* and *Moses* v. *Parker, ex p Moses*, 1896 AC 245 (PC), were examined and largely distinguished on the ground that the phraseology of the Australian "judicial power of the Commonwealth" provisions, and the reasoning turning on the ability to create binding and enforceable liability, did not translate directly to the differently-worded Indian statute, under which an Industrial Tribunal's award is itself enforceable by the coercive machinery of the Act once declared binding — a "spark of life" imparted automatically, not discretionarily, by the Government.

### The partly dissenting opinion

A third opinion, with which one other judge agreed entirely, took a materially different view on the first point while ultimately concurring in dismissing the appeal. This opinion held that an Industrial Tribunal is, properly speaking, an administrative body exercising quasi-judicial functions rather than a judicial Tribunal. Drawing on the distinction between judicial and quasi-judicial power articulated by Sir Maurice Gwyer before the Committee on Ministers' Powers (1929) and adopted in *Cooper* v. *Wilson*, (1937) 2 KB 309, 340-41 (CA) — namely, that a true judicial decision involves presentation of a case by the parties, ascertainment of disputed facts through evidence, submission of legal argument, and a decision applying the fixed law of the land to the facts found, whereas a quasi-judicial decision need not involve either legal argument or application of fixed law, the outcome instead resting on administrative policy or discretion — this opinion held that the Industrial Tribunal's award becomes complete and binding only upon a subsequent, and in some cases discretionary (where the Government is itself a party), governmental act, and that the Tribunal is not confined to applying fixed law but may create new rights and obligations according to notions of fairness and expediency, akin to an extended form of collective bargaining rather than adjudication according to law. On this reasoning, and relying on the Federal Court's own earlier characterisation of Industrial Tribunals in *Western India Automobile Assn.* v. *Industrial Tribunal*, (1949-50) 11 FCR 321 : 1949 SCC OnLine FC 12, this opinion concluded that the Industrial Tribunal is not a judicial Tribunal and its determination is not a judicial determination in the proper sense, so that Article 136 did not, properly construed, contemplate an appeal from it at all.

However, even on this view, it was held that the word "Tribunal" in Article 136 must be construed liberally and not narrowly, and that even a Tribunal discharging functions of a judicial nature "in accordance with law" — which an Industrial Tribunal does, to a degree — falls within the ambit of the Article, so that an application for special leave was, in a broad sense, competent, though the Court should be extremely reluctant to actually admit and entertain such appeals given the numerous practical difficulties involved (for instance, the fact that the Tribunal's determination is not complete or binding without governmental declaration, that the Court's own decision on appeal would similarly require governmental confirmation to have effect, and that the Tribunal is not bound to decide according to fixed rules of law, making appellate review of the "correctness" of its decision largely inapposite). It was accordingly held that ordinarily the Supreme Court would not admit an appeal from an Industrial Tribunal's award save in the rarest of cases involving jurisdictional excess or a denial of natural justice, in which event the more appropriate remedy would, in any event, be a writ of certiorari or prohibition before the High Court.

### The merits of the appeal

On the assumption that the appeal was competent, the majority proceeded to examine the four grounds urged by the appellant Bank.

The first ground — that the word "victimisation" had been given an unduly wide interpretation by the Tribunal, resulting in it assuming jurisdiction over matters not referred to it — was rejected as not amounting to a matter of the "vital character" that would justify exercise of the extraordinary power under Article 136, "victimisation" being an ordinary English word (not a defined term of law) meaning that a person has been unjustly dealt with, and the Tribunal's interpretation not having materially affected its determination.

The second ground — that the Tribunal had erred in ordering reinstatement of employees who had participated in what was said to be an illegal strike under Section 23(b) of the Act — was similarly rejected. It was noted that a strike during the pendency of an earlier reference before a Tribunal may, per certain Calcutta High Court authority, be illegal even if arising from fresh demands, but that the members of the Tribunal in the present case, though divided on the correctness of this proposition, agreed that it did not affect their determination on Item 18; the statute, moreover, does not bar reinstatement of persons found to have engaged in an illegal strike, and the point did not warrant interference under Article 136.

The third ground — that the award was based on no evidence whatsoever — was treated as requiring serious consideration. Examination of the Tribunal's proceedings under Rule 17 disclosed that the Tribunal had simply called upon the parties to state their respective cases, after which each side's representative addressed arguments and the Tribunal proceeded straight to its award, without any examination or cross-examination on oath, without any affidavit filed in support of the allegations of victimisation, and without any consideration of the detailed affidavit filed by the Bank disputing those allegations. On this view, the procedure adopted by the Tribunal was found to be against all principles of natural justice, the award being founded on no material capable of sustaining it — the members appearing to have proceeded to judgment on their own view of the merits, unaided by any evidentiary material, a mode of proceeding described as unwarranted by the statute and foreign to a democratic Constitution. On this basis it was held (in a view expressed by way of dissent on the ultimate disposal, but concurred in as to reasoning by another member on the wider legal question) that this ground alone would justify quashing the award.

The fourth ground — that the award, though heard by all three members, had been signed by only two, contrary to Section 16 of the Industrial Disputes Act, 1947 (which mandates that an award be in writing and signed by all members, though permitting a dissenting minute) — was also examined in depth. It was found that although one member had ceased to be available (having been appointed to the Boundary Commission), the Government had at no stage formally reconstituted the Tribunal under Section 8 of the Act, despite having the power to do so; a mere exchange of telegrams between the remaining members and the Labour Ministry, advising them to "proceed as they were," was held insufficient to cure the defect. Reliance was placed on the Privy Council's decision in *Fakira* v. *King Emperor*, (1936-37) 64 IA 148 : 1937 SCC OnLine PC 25, where non-compliance with a similarly peremptory requirement (confirmation of a sentence by at least two of a two-Judge Court) was held fatal, and on *Varadaraja Mudaliar, An Advocate, Madras, In re*, AIR 1942 Mad 267 : 1941 SCC OnLine Mad 390, where a report of a Bar Council Tribunal was similarly invalidated because one member had died without signing. On this reasoning it was held that the provisions of Section 16 are mandatory, that the award given by only two of the three members who had heard the entire case was not the award of the Tribunal as constituted, and that it was accordingly vitiated and had to be quashed, with a direction that the reconstituted or continuing Tribunal readjudicate Item 18 of the reference and resubmit its award to the Government.

However, this view on the merits (that the award should be quashed) was a minority position among the five judges. The majority — comprising those who had held that this was, in any event, not a proper case for interference within the narrow and exceptional scope of Article 136 — took the position that the aggrieved parties should seek redress, if at all, through other appropriate proceedings (i.e., before the High Court by way of writ), and declined to interfere with the Tribunal's award on the facts of the case.

## Final Decision of the Court

By majority, the Supreme Court held that the preliminary objection as to maintainability should be overruled — the Industrial Tribunal was held to fall within the meaning of "Tribunal" in Article 136 (with differing degrees of emphasis on whether it was truly a "judicial" Tribunal or one exercising quasi-judicial functions), and an appeal by special leave was accordingly held to be competent, though only to be exercised with great caution and reluctance having regard to the special nature of industrial adjudication.

On the merits, however, the majority held that this was not a case calling for interference with the Tribunal's award under the extraordinary and discretionary jurisdiction conferred by Article 136, and that the aggrieved parties, if so advised, could pursue other appropriate remedies. One judge, dissenting on the facts (though broadly agreeing on the law), would have allowed the appeal to the extent of quashing the award and remitting Item 18 of the reference for fresh adjudication by a properly constituted Tribunal.

**The appeal was accordingly dismissed with costs.**

## Point of Law Settled

*Bharat Bank* is a foundational authority on the reach of Article 136 of the Constitution and continues to be cited for the following propositions:

1. **Breadth of Article 136:** The power conferred by Article 136 is deliberately couched in the widest possible language, overriding by its non-obstante clause the more restrictive appellate provisions of Articles 132–134. It is not confined to final orders of the High Court but extends to any judgment, decree, determination, sentence, or order — including interlocutory orders — of any court or Tribunal in India (subject only to the express exclusion for military courts/Tribunals under clause (2)).

2. **"Tribunal" includes bodies that are not courts in the strict sense:** The word "Tribunal" in Article 136 was deliberately introduced to extend the Supreme Court's special leave jurisdiction beyond courts of justice properly so called, to bodies which, while not courts in the traditional sense, are invested with a part of the judicial power of the State and possess the "trappings of a court" — i.e., they adjudicate disputes between parties, hear evidence, and render binding determinations, even if those determinations require external confirmation to take legal effect.

3. **An Industrial Tribunal under the Industrial Disputes Act, 1947 falls within Article 136:** Whether characterised as a judicial Tribunal (majority view) or as an administrative body exercising quasi-judicial functions (the partly dissenting view), an Industrial Tribunal's award was held to be a "determination" of a "Tribunal" amenable, in principle, to the Supreme Court's special leave jurisdiction. The requirement of a subsequent governmental declaration under Section 15 of the Act to make the award binding does not, by itself, deprive the Tribunal's determination of its adjudicatory character, since the Government (outside the special case where it is itself a party) possesses no discretion to withhold, alter or add to the award.

4. **The jurisdiction, though wide, is to be exercised sparingly:** Article 136 confers an extraordinary, residuary and discretionary power, to be exercised only in exceptional circumstances — where there has been a grave miscarriage of justice or a departure from the fundamental principles of natural justice or procedure — and not as a matter of course or as a substitute for the ordinary appellate process. In relation to determinations of Industrial Tribunals in particular, the Supreme Court signalled that it would be markedly reluctant to interfere, given the special, non-adjudicatory character of much industrial dispute resolution and the practical difficulties of superintending awards that are not based on fixed rules of law.

5. **Mandatory procedural requirements bind Tribunals strictly:** Statutory requirements — such as the requirement under Section 16 of the Industrial Disputes Act, 1947 that an award be signed by all members of the Tribunal who heard the matter — are to be treated as mandatory, and non-compliance (absent formal reconstitution of the Tribunal under Section 8) may vitiate the award, underscoring the broader administrative-law principle that a statutory Tribunal must function strictly in accordance with the manner prescribed by the statute constituting it.

This decision laid the doctrinal foundation for the subsequent, extensive body of Indian jurisprudence on Article 136, and for the classification and treatment of quasi-judicial Tribunals more generally in Indian administrative law.

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**Case Details:** *Bharat Bank Ltd. Vs  Employees of Bharat Bank Ltd.*, decided on 26 May 1950, Civil Appeal No. 34 of 1950, reported at 1950 SCC 470, Supreme Court of India, before Harilal Kania, C.J., and Fazl Ali, Patanjali Sastri, Mehr Chand Mahajan and B.K. Mukherjea, JJ.