Holding

The Industrial Court erred in granting the workers appointment as investigators and retrospective back wages; the workers had no legal right to such appointment and the award is set aside.

Summary

In 1980-81 Laxmi Rattan Cotton Mills Ltd. engaged six workers as trainee investigators on a stipend, expressly stating no obligation to appoint them thereafter. After training, the mill offered them clerk positions, which they accepted without protest and later made permanent. When the mill became sick and closed in 1991, the workers, through a union, demanded appointment as investigators from the date of their initial engagement, seeking back wages. The Industrial Tribunal awarded them the investigator posts with retrospective pay, a decision upheld by the High Court. On appeal, the Supreme Court held that the workers had no legal right to the investigator posts, that their long‑standing acceptance of clerk posts invoked the doctrines of acquiescence and waiver, and that the Industrial Court’s discretion under s.11A was exercised improperly. Consequently, the award was set aside and no retrospective back wages were granted, though any amounts already paid could not be recovered.

Issues considered

The entitlement of the workers to be appointed as investigators and to receive back wages from the date of their initial engagement.
Whether the doctrine of acquiescence and waiver applies due to the workers' acceptance of clerk positions and the delay in raising the dispute.
The scope and proper exercise of discretion under Section 11A of the Industrial Disputes Act, 1947 by the Industrial Court.
The applicability of Articles 14 and 16 of the Constitution in the context of the workers' appointments.

Legislation cited

Apprentices Act, 1961
Industrial Disputes Act, 1947s. 11A
U.P. Industrial Disputes Act, 1947s. 4(k)

Subjects

industrial disputetrainee investigatorback wagesacquiescencewaiverSection 11AIndustrial Court discretionappointmentclosure of millvoluntary retirementArticles 14 and 16

Judgment

[2008] 16 S.C.R. 283

MIS. LAXM1 RATTAN COTTON MILLS LTD. A
II.
. STATE OF U.P. & ORS .
.(Civil Appeal No. 6710 of 2008)

NOVEMBER 19, 2008
B
, 1
[S.B. SINHA AND CYRIAC JOSEPH, JJ.)

Industrial Disputes Act, 1947 ~ s. 11A - Powers of labour
Court- Scope - Grant of back wages - Held: Industrial Court
c
.has wide discretion in terms of s. 11 A -: But, such discretion
.to be exercised judiciously - On facts, engagement of workers
as trainee investigators did not confer any right on them to
be appointed substantively against any post - Yet after
completion of training, Management offered employment to
the workers as clerks, a lower post carrying less wages, which D
.they accepted without any demur.,.. Only after the mill became
" sick ·ten years later and was closed, the workers made a
belated attempt to raise industrial dispute by seeking
appointment in the post of investigator from date of initial
appointment - Doctrine of acquiescence and waiver was thus E
applicable - Industrial Court erred in upholding the claim of
workers to the post oi Investigator and in directing grant of
back wages with retrospective effect- U.P. Industrial Disputes
Act, 1947.
" .. In 1980-81, Appellant-mill engaged respondent Nos.2
F
to 7 as trainee investigators on monthly stipend basis, on
the condition that it would have no obligation to provide
them any employment after completion of the training
period. Nevertheless, on completion of the training, the
said private respondents were offered appointment as G
>; clerks i.e. at a lower post carrying lower wages. Allegedly,
at that point of time, only the posts of clerks were vacant.
The private respondents accepted the post of clerk

283 H
284 SUPREME COURT REPORTS [2008] 16 S.C.R.

A without any protest or demur and at a later date also
accepted permanent status on such post without any
protest.

However in 1991, after the appellant-mill became sick
and was eventually closed, the private respondents
8
raised demand, seeking entitlement to the post of
investigator, from the date of initial appointment.
Reference was made before the Industrial Tribunal, which
upheld the entitlement of the private Respondents, but
from the date of reference of the matter to the Court.
C Appellant filed writ petition before the High Court.
Meanwhile, pursuant to a scheme floated by the appellant
for voluntary retirement, the respondents applied therefor
and obtained compensation. The writ petition was
dismissed. The 'management filed the instant appeal.
D
Allowing the appeal with certain directions, the Court

HELD: 1.1. Whether the respondents were entitled to
be appointed as investigators was the question which
should have been posed and answered by the Industrial
E Court. From the terms of offer of engagement issued in
· favour of the respondents, it is evident that their job as
trainee investigators was temporary in nature. They were
not conferred with any o;tatus. They were only engaged
as trainee investigators. Their appointments had not
F been made in strict compliance of the constitutional ~- ~
scheme of equality contained in Articles 14 and 16 of the
Constitution. They were not even appointed as
. apprentices within the meaning of the provisions of th~
Apprentices Act, 1961. [Para 13) [293-A-B-C]
G
1.2. The respondents were offered the posts of clerk
which was accepted by them as the same were vacant. ~
They had no l~gal right to be appointed as investigators.
hey accepted the said offer without any demur
H whatsoever. For a long time, no industrial dispute was
LAXMI RATIAN COTION MILLS LTD. v. STATE OF U.P. 285 ·
& ORS.

raised nor any demand was made by them or the Union ' A
on their behalf. The concerned respondents were nofi'
illiterate. They wer<'! aware of their rights. If they stood'by'i
for a long time, the doctrine of acquiescence and waiver::
·would apply in their cases. [Para 14] [29?-D-E] = •· · " ' 1''
.;, .· . :.' .'iii) 8:'1
.. 1.3.lt may be that the respondents were forced to,.. ·
accept appointment in lower posts although they were .
entitled for appointment to higher post, but, merely;;
because at a later point of time services of an employee ..
were regularized in the post of investigator would itself'. ..
cannot be said to be determinative of the factor that the C
action on the part of the employer was discriminatory and/
or malafide in nature. [Para 15] [293-G-H; 294-A]
. 1.4. The act of discrimination and/ or inappropriate.
action on the part of the employer, if any, should have. 0
been the subject matter of a demand immediately after
their appointment as clerks. The private respondents not .
only accepted their appointments to the post of clerk; ,
they were made permanent in the said post.. Another .·
principle which was applicable in the instant case was · E
also lost sight of by the Tribunal, viz., that Article 14 of
the Constitution carries a positive concept and no
equality can be claimed in illegality. [Para 16] [294-D]
• 1 1.5. In the instant case, the Industrial Court did not
deliberate upon any of the issues which arose for its F·
consideration while the High Court merely endorsed the
views of the Industrial Court without applying its mind
independently. [Para 17] [295-D]
1.6. The fact that the respondents even while opting
for the voluntary retirement stated their designations to G ·
be clerks may not be decisive but then it is at least a
pointer to show that they had all along accepted the said
position. The Industrial Court as also the High Court failed ·
and/ or neglected to consider the fact that the time when
H'
286 SUPREMECOURT REPORTS [2008] 16 S.C.R.

A the industrial dispute was raised, the Mill had already
been closed. The Industrial Court in terms of s.11A of the
Industrial Disputes Act, 1947 exercises a wide discretion.
But, such discretion must be exercised judiciously. All
attempts must be made to strike a balance. Even
s otherwise grant of back wages and that too with
retrospective effect may not be appropriate in all
situations However, in the instant case, if any sum has
been paid to the workmen pursuant to the impugned
award of the Tribunal and the judgment of the High Court,
C the same shall not be recovered. [Paras 18 and 21) [295-
E, F·H; 296-A]

Mahendra L. Jain and Others v. Indore Development
Authority and Ors.[(2005) 1 SCC 639); M.P, Housing Board
and Another v. Mano} Shfivastava (2006) 2 SCC 702; M.P.
D State Agro Industries Development Corpn. Ltd. and Another
v. S. C. Pandey (2006)' 2 SCC 716; Indian Drugs &
Pharmaceuticals Ltd. v. Workmen, Indian Drugs &
Pharmaceuticals Ltd. (2007) 1 SCC 408; Gangadhar Pillai
v. Siemens Ltd. (2007) 1 SCC 533 and C.S. Azad Krishi
E Evam Prodyogiki Vishwavidyalaya v. United Trades Congress
and Anr. (2008) 2 SCC 552, relied on.

Case Law Reference:
(2005) 1 sec 639 relied on Para 16
t -
F (2006) 2 sec 102 relied on Para 16
(2006) 2 sec 116 relied on Para 16
(20011 1 sec 408. relied on Para 16
(20011 1 sec 533 relied on Para 16
G
(2008) 2 sec 552 relied on Para 16
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
6710 of 2008.
From the final Judgment and Order dated 17.7.2006 of the
H
LAXMI RATIAN COTION MILLS LTD. v. STATE OF U.P. 287
288 SUPREME COURT REPORTS [2008] 16 S.C.R. ·

"1. That you.shall be paid a basi~ salary of Rs. 120/- per
montH'in'ihe· s2aie' ot'Rs'.• 120-'s:.:f5():fo'.zoo~EB-f3:255_
16-345-EB-20-44q:-?,,4-~.1_~)9 ,ad,d,itjon Y.OHcWill)i,~ ,~aid
other allowances as applicable to other temporary clerks
oftheMills: ··<·Vi.···;"".•:.. ..··:· ~"'' ~··
•'
2. That your appointment is fora p·eriod . ofsix·months on
account of temporary exigency of work and after
;:;•'eornp~tion ofwHich'yciur seivTcewill stand 'iiuforrialically
c' · · terminated:·Howevef, we ·reserve the 'righffo' terminateyou'i'"
service ever earlier at any time without as'sig'ning arW}.'
reason and without any notice or payment in lieu thereof>

·3. That you will have to wcirk againsfabsenfeeism/ leave .
D' . ·ete.• amongst clerks~in any ofthe departni.entS/ sections in'.'
' 'the' General Office
;.-,
well as in the Mills. . as
' . . 'i'

4. That your other terms and conditions ofservk:e will be';7
governed by standing order applicable for clerks in this Mill.
,. ,, - ·- - .... • • • l... "". • '··
. '; - ~- .
E '·***
.•
,.;. . ***
·, .
. > , .If the above offer is acceptable fo.you, plea.se sign .
. copy of this letter Jn token of your acceptance and repor:!•:'
for joining immedi?tely."

F' They were offered the scale of pay applicable to a clerk.
They.?cc;epted the said post without any protest or demur. They
were ala.
later date made permanent clerks also. Yet again,
they accepted the said status without any demur whatsoever.
• - ... J ••

G .. The.Company, however, became sick in October, 1991.
A r~ference was made to the Board for Industrial and Financial , . ~ •
Reconstruction (BIFRj whereupon a proceeding was initiated~. .
Evenh.ially, thEi. Mill was closed, upon obtaining an approval from.···..
the Central Government in terms of Section 250 of the lndustriai·· ·
H : Disputes·, Act, 1947. Only after closure of the said Mills
LAXMI RATIAN COTION MILLS LTD. v. STATE OF U.P. 289
& ORS. [S.B. SINHA, J.)
_.
sometime in October, 1991, the concerned respondents raised A
a demand through a Union known as Kapda Mills Karamchari
Sangh on 1.02.1992 seeking for the post of investigators and
that too from the date of their initial appointment with arrears
and difference in pay.
B
Pursuant to and in furtherance of the said demand, the
~ f State of Uttar Pradesh, in exercise of its power conferred upon
it under Section 4(k) of the U.P. Industrial Disputes Act, 1947
made a reference for adjudication thereof before the Tribunal
by a notification dated 2.04.1993, which reads as under:
c
"Whether giving the designation of clerk and pay scale to
tis 6 workmen mentioned in enclosed Schedule, after
imparting training of Investigator to them, is appropriate
and legal? If not then what kind of relief, the concerned
employees are entitled to get? From which date with any D
other detail?"
+
6. Before the Tribunal, the respondents sought for a
direction for appointment in the post of investigators from !he
date of their initial appointment. E
7. Appellant in its written statement inter alia denied or
disputed that the Union at any point of time had made any

~ . demand or representation in regard to the change of the status
ofthe said employees. It was contended that the Management
was not bound to provide any employment to the respondents,
upon completion of the terms of their training. The fact that the
F

production of the Mill was lying closed was also brought to the
notice of the Tribunal.

Furthermore, it was urged that any fresh financial burden G
would have adverse effect on the industry as any wage revision
-. had been barred.

8. The Industrial Court, however, by reason of an award
dated 3.11.1988 directed:
H
290 SUPREME COURT REPORTS [2008] 16 S. C.R.

A "... It is beyond comprehension as to how the workmen
concerned even after completion of a successful training
period would prefer to be appointed for a lower post
carrying less wages ... For the sake of argument if it is
assumed that no posts of investigators were available at
B the time of completion of their trai11ing then in the event of
vacancy, the plaintiffs would have been given preference
~
for appointment to the post of investigators ... " ~

It was held:
·c "15. Therefore, I order that the plaintiffs be treated
·as senior on the post of investigator to Sh. Sun ii Kumar
. Chaurasiya in the pay scale of Rs. 330-560 from the dale
of absorption and in the scale of Rs. 1400-2300 w.e.f.
31.12.95 and thereafter in the pay scale of Rs. 4500-7000/
D -. The plaintiffs are to be fixed in the pay scale of Rs. 330-
560 w.e.f. 9.3.82 and subsequent fixation of pay from
different dates in the revised scales of pay and they will + 1
•
be paid the difference of pay as arrears but due to
delayed raising of the matter/ litigation the plaintiffs will be
E eligible to draw difference of pay from the date of reference
of matter to the Court. They shall also be entitled of Central
D.A. fOr the post of investigator."

9. A writ petition preferred thereagainst has been
dismissed by the High Court by reason of the impugned
F judgment. t •

During pendency of the writ application, however,
subsequent events took place, which have been brought to the
notice of this Court, by reason of a supplementary affidavit filed
G on 25.04.2005, that the respondents, in the meanwhile pursuant
to a scheme floated for voluntary retirement scheme known as
the Modified Voluntary Retirement Scheme, applied therefor
and obtained compensation in the following terms:
,.
-
H
LAXMI RATIAN COTION MILLS LTD. v. STATE OF U.P. 291
& ORS. [S.S. SINHA, J.]

SI. Name of the Date of Net amount Date of A
No. respondents resignation paid (Rs.) receipt
1. Sandip Kumar 12-07-2002 2,95,090/- 10-10-2003
Bajpai (Res. No.2)
2. Surendera Ballab 12-07-2002 3,26,779/- 29-05-2005
Goswami (Res. No.3) B
3. K.S. Usmani 12-07-2002 2,80,636/- 15-03-2004
(Res. No. 4)
4. Ramendra Prasad 12-07-2002 2,98,670/- 10-10-2003
Sharma (Res. No.5)
5. Shankar Pathak 12-07-2002 2,90,240/- 31-10-2003 c
.
(Res. No. 6)
6. Ram Kewal Kanojia 12-07-2002 2,95,090/- 10-10-2003
(Res. No. 7)

-• 1
10. By reason of the impugned judgment, however, the writ D
petition was dismissed opining that the award of the Industrial
;;: Tribunal was neither perverse nor suffered from any error
apparent on the face of the record.

11. Mr. Sanjay Ghosh, learned counsel appearing on
E
behalf of the appellant, would submit:

(i) the respondents have not worked for a single day
in the posts of investigator;
.. ~ (ii) From October, 1991 and till the employees retired F
under the voluntary retirement scheme in 2002, the
Mill was lying closed and, therefore, there was no
requirement of any investigator.

(iii) The National Textile Corporation is a sick industrial
G
company and its financial capacity or availability of
.,,. ~
post or requirements for job by it had not been
considered by the courts.

(iv) Engagement of the respondents as trainees d!d not
confer any right on them to be appointed H
292 SUPREME COURT REPORTS [2008] 16 S.C.R.

A substantively agains1 the post and in any event the
concept of seniority in the posts of trainees is wholly
unknown.

(v) A belated attempt to raise a dispute after ten years
B seeking reclassification or redesignation of the post
and that too from the initial date of appointment was
~ ~
wholly· unwarranted.

(vi) The Industrial Court committed a serious error in
directing the appellant to grant a higher post and
c that too de'hors the rules, vacancies and
requirements of the company. In any event, the
same could not have been granted with
retrospective effect and that too without taking into
consideration the contentions raised by the
D Management.

(vii) The principles of "No Work No Pay" should have
~
-.
-~

been applied in the instant case.

12. Mr. Bharat Sangal, learned counsel appearing on
E behalf of the respondents, on the other hand, would contend that
the action on the part of the Management was wholly mala fide,
in as much as the respondents had been making
representations for a long time pointing out that in similar cases

F
the trainees had been absorbed. ,_ .
The learned counsel would contend that the fact that the
appellant adopted a policy to absorb such trainees on the post
of investigators having not been denied or disputed, the
impugned judgment should not be interfered with.
G As regards delay, Mr. Sangal would contend that in its
award, the Industrial Court had not granted the entire back ,. "'
wages as it was directed "due to delayed raising of the matter/
litigation the plaintiffs will be eligible to draw difference of pay
from the date of reference of matter to the Court".
H
LAXMI RATIAN COTION MILLS LTD. v. STATE OF U.P. 293
& ORS. [S.S. SINHA, J.]
~
13. The reference made by the appropriate government A
for adjudication of the industrial dispute by and between the
parties relates to a purported legal right. Whether the
respom:lents, ttrns, were entitled to be appointed as
investigators was the question which should have been posed
· and answered by the Industrial Court. From the terms of offer B
) of engagement issued in favour of the respondents, it is evident
that their job as trainee investigators was temporary in nature.
They were not conferred with any status. They were only
engaged as trainee investigators. Their appointments had not
been made in strict compliance of the constttutional scheme
of equality contained in Articles 14 and 16 of the Constitution
c
· of India. They were not even appointed as apprentices within
the meaning of the provisions of the Apprentices Act, 1961.

14. Respondents were offered the posts of clerk: which was
accepted by them as the same were vacant. They had no legal D
+ right to be appointed as investigators. They accepted the said
offer without any demur whatsoever. For a long time, no
industrial dispute was raised nor any demand was made by
them or the Union on their behalf. The concerned respondents
were not illiterate. They were aware of their rights. If they stood E
by for a long time, the doctrine of acquiescence and waiver
would apply in their cases. In its award, as noticed
herein before, the Industrial Tribunal commented that "how the
workmen concerned even after completion of a successful
' , -4
training period would prefer to be appointed for a lower post F
carrying less wages", but that is a question which was required
to be answered by the workmen as to why such offers were
accepted.
15. It is one thing to say that the respondents were forced
G
to accept appointment in tower posts although they were
... ~ entitled for appointment to higher post, but, it is another thing
to say that only because at a later point of time services of one
gentleman were regularized in the post of investigator would
itself be determinative of the factor that the action on the part
H
294 SUPREME COURT REPORTS [2008] 16 S.C.R.

A of the employer was discriminatory and/ or malafide in nature.

The opinion of the Industrial Court that even if no post of
investigator was available, as soon as vacancy occurred the
same should have been offered to the respondents cannot be
B held to be correct. We say so firstly because the respondents .
had no legal right to the said posts; secondly, if they had
accepted to work in the post of clerk for a long time, only '
because subsequently a vacancy arose, the same in law was
not required to be offered to those who had taken training; and
thirdly, only because the Management had spent some amount
c for their training, the same by itself is not a ground that they
should have been absorbed as investigators.

16. The act of discrimination and/ or inappropriate action
on the part of the employer, if any, should have been the subject
D matter of a demand immediately after their appointment as
clerks. They not only accepted their appointments to the post
+
of clerk; as noticed hereinbefore, they were made permanent
in the said post.

Another principle which was applicable in the instant case
E
was also lost sight of by the Tribunal, viz., that Article 14 of the
Constitution of India carries a positive concept and no equality
can be claimed in illegality.

In Mahendra L. Jain and Others v. Indore Development .
F Authority and Others [(2005) 1 SCC 639], this Court held: }-- '

"19. The question, therefore, which arises for consideration
is as to whether they could lay a valid claim for
regularisation of their services. The answer thereto must
be rendered in the negative. Regularisation cannot be
G
claimed as a matter of right. An illegal appointment cannot
be legalised by taking recourse to regularisation. What
~ .
can be regularised is an irregularity and not an illegality.
The constitutional scheme which the country has adopted
does not contemplate any back-door appointment. A State
H
LAXMI RATIAN COTION MILLS LTD. v. STATE OF U.P. 295
& ORS. [S.B. SINHA, J)

before offering public service to a person must comply with A
the constitutional requirements of Articles 14 and 16 of the
Constitution. All actions of the State must conform to the
constitutional requirements. A daily-wager in the absence
of a statutory provision in this behalf would not be entitled
to regularisation." B
! [See also M.P. Housing Board and Another v. Manoj
'
Shrivastava (2006) 2 SCC 702, M.P. State Agro Industries
Development Corpn. Ltd. and Another v. S. C. Pandey (2006)
2 SCC 716, Indian Drugs & Phrmaceuticals Ltd. v. Workmen,
Indian Drugs & Pharmaceuticals Ltd. (2007) 1 SCC 408, c
Gangadhar Pillai v. Siemens Ltd. (2007) 1 SCC 533 and C.S.
Azad Krishi Evam Prodyogiki Vishwavidyalaya v. United
Trades Congress and Anr. (2008) 2 SCC 552].

17. The Industrial Court, unfortunately, did not deliberate D
upon any of the aforementioned issues which arose for its
consideration. The High Court again failed to address itself the
aforementioned principal issues. It merely endorsed the views
of the Industrial Court without applying its mind independently.

18. We may also notice the subsequent events. A voluntary E
retirement scheme was floated. Respondents even while opting
therefor stated their designations to be clerks. That may not be
decisive but then it is at least a pointer to show that they had
all along accepted the said position.
.. i F
19. The Industrial Court as also the High Court furthermore
failed and/ or neglected to consider the fact that the time when
the industrial dispute was raised, the Mill had already been
closed.

20. There cannot be any doubt whatsoever that the G
j
Industrial Court in terms of Section 11A of the Industrial Disputes
Act, 1947 exercises a wide discretion. But, such discretion must
be exercised judiciously. All attempts must be made to strike
a balance. Even otherwise grant of back wages and that too
H
296 SUPREME COURT REPORTS [2008] 16 S.C.R.

A with retrospective effect may not be appropriate in all situations.

21. For the. reasons aforementioned, the impugned
judgment cannot:be sustained which is set aside accordingly.
However, if any sum has been paid to the workmen pursuant
8 to the impugned award of the Tribunal and the judgment of the
High Court, the same shall not be recovered. The appeal is
allowed with the aforementioned directions. In the facts and
circumstances of the case, there shall be no order as to costs.

8.8.8. Appeals allowed.

•

t ..