judgement:
Appeal No. 131 of 1968.
Appeal by special leave from the Award dated December 8, 1967 of the Industrial Tribunal, Punjab in Reference No. 44 of 1966.
H.R. Gokhale, Anand Parkash, J.B. Dadachanji, K.P. Bhandare and Bhuvnesh Kumari, for the appellant.
A. K. Sen, Rameshwar Nath and Mahinder Narain, for the respondents.
The Judgment of the Court was delivered by Vaidialingam, J.
This appeal, by special leave, is directed against the award dated November 24, 1967 of the Industrial Tribunal, Punjab, Chandigarh, in Reference No. 44 of 1966.
The President of India, by order dated October 31, 1966 referred the following issues for adjudication under section 10(1)(d) of the to the Industrial Tribunal, Punjab, Chandigarh: 708 "1.
Whether the workmen are justified in demanding the minimum bonus payable for the years 1964 65, 1965 66 and future years being fixed @ Rs. 110/ and the maximum @ Rs. 360/ per worker ? If so, with what details ? 2.
Whether the action of the management in treating 4 days advance bonus paid for the year 1965 66 as deductible from bonus payable in future years is justified? If so, are any conditions or stipulations necessary and if so with what details ? 3.
Whether there is any justification for making any amendments in the production bonus scheme introduced by the management in such a way that it enables payment of bonus to the lower paid workers at higher rates and higher paid workers at lower rates ? If so, with what details ? 4.
Whether the workers are entitled to any wages or compensation for the period of strike viz., 12th October to 31st October, 1966.
" It may be stated at the outset that this Court is not concerned with issue No. 3.
The question of introduction of production bonus scheme arises only to a limited extent in so far as it has got a bearing on a contention raised by the appellant that the production bonus scheme has been introduced in substitution of ex gratia payment of bonus which was being made by the management.
Even as regards the strike period mentioned in issue No. 4, parties were agreed before the Tribunal that the period of strike in respect of which wages or compensation were claimed by the workmen was from 17th October to 31st October 1966 and not from 12th October as stated in the issue.
The circumstances under which the Reference came to be made by the President of India may be stated.
The appellant Fertiliser Corporation of India is a limited company incorporated under the and it is also a Government company, as defined in section 617 of that Act.
The Nangal unit of the appellant went into production for the first time during the financial year 1962 63.
On October 29, 1963, the appellant issued a Circular regarding the grant of ad hoc bonus for the year 1962 63.
The General Manager states, in this Circular that the management has sanctioned payment of ad hoc bonus to employees of Nangal unit for good performance during the year 1962 63 and that bonus will be payable to all employees who are on the rolls of the Corporation on October 30, 1963 and had completed 1 year 's service on March 31, 1963 and whose basic salary on that date did not exceed Rs. 500/ per mensem, The 709 Circular proceeds to state that the amount of bonus payable will be 1 month 's basic salary plus dearness allowance, subject to the condition that no employee will get less than Rs. 100/ or more than Rs. 300/ .
On December 17, 1964, the appellant issued a circular regarding the gram of bonus and ex gratia payment for the year 1963 64.
This circular states that the management has decided to sanction bonus and ex gratia payment to the employees of the Nangal unit on the basis mentioned therein.
The principles laid down in this circular regarding payment of bonus and ex gratia payment are: (1) Bonus is being paid to all eligible employees strictly in conformity with the Bonus Commission 's recommendations, as accepted by the Central Government, and the said bonus is the minimum bonus payable as per the Bonus Commission 's recommendations, equivalent to 4% of the total basic wage and dearness allowance (excluding all other allowances etc.) paid during the year 1963 64.
The employees eligible for these payments are those who draw a total basic pay and dearness allowance up to Rs. 1,600 per mensem and the quantum payable to employees drawing over Rs. 750/ of basic pay and dearness allowance will be limited to what they would get if their pay and dearness allowance were only Rs. 750/ per month.
(2) An additional ex gratia payment to be made to all workers drawing basic pay up to Rs. 500/ per month, to the extent that such payment, together with the bonus indicated earlier, is equivalent to at least one month 's full salary (basic pay plus dearness allowance); and the total payment, i.e., bonus and ex gratia, in the case of workers drawing basic pay up to Rs. 500/ per month would be subject to a minimum of Rs. 100/ and maximum of Rs. 300/ .
(3) The minimum qualifying service .for ex gratia payment will be 3 months and the minimum qualifying service for payment of bonus as per Bonus Commission 's recommendation is 30 days.
On December 30, 1964 the appellant issued another circular stating that the minimum limit of Rs. 100/ in respect of bonus and ex gratia payment for the year 1963 64, as per its circular dated December 17, 1964 is raised to Rs. 110/ and that the enhanced amount will be paid along with the salary for the month of December 1964.
Regarding the grant of bonus for the year 1964 65, another circular was issued by the appellant on September 27, 1965.
this circular it is stated that bonus for the year 1964 65 has been decided to be paid strictly in accordance with legal obligations arising out of the payment of bonus under the Payment of Bonus Ordinance, 1965 (Ordinance No. 3 of 1965) (hereinafter referred to as the Ordinance).
According to that Ordinance, bonus 710 that is payable is the minimum bonus which will be equivalent to 4% of the total basic pay and dearness allowance (excluding all other allowances) paid during the year 1964 65, or Rs. 40/ , whichever is higher.
The employees eligible for the bonus will be those who draw a total basic pay and dearness allowance up to Rs. 1,600/ per month, but the quantum of bonus payable to employees drawing total pay and dearness allowance over Rs. 750/ per month will be limited to what it would be if their pay and dearness allowance are only Rs. 750/ per mensem.
It may be stated at this stage that the Ordinance was promulgated on May 29, 1965 and the (Act XXI of 1965) (hereinafter called the Bonus Act) came into force on September 25, 1965.
On December 9, 1965 the Minister of Labour and Employment made a statement in the Lok Sabha regarding a decision having been taken by the Central Cabinet on December 2, 1965.
In this statement the Minister has referred to the fact that with the specific approval of the Cabinet ex gratia payments had been allowed in the past by way of bonus to employees drawing upto Rs. 500/ per mensem in some undertakings in the public sector.
After referring to the recommendations of the Bonus Commission, the Minister announced the decision of the Cabinet dated December 2, 1965.
As the said decision of the Cabinet has been circulated to the appellant, the matters referred to in the said decision will be adverted to by us when we refer to the letter of the Government addressed to the appellant. ' On December 21, 1965 the Government of India addressed a communication to the Chairman and Managing Director of the appellant company on the subject of bonus payable to employees in the public sector undertakings.
As the claim of the labour in the case, for bonus being paid for 1964 65 and 1965 66 is substantially based upon the decision of the Central Cabinet dated December 2, 1965 and as according to the appellant this communication cannot be considered to be a direction or an order, it is desirable to quote, in extenso, the said communication: No. CH/COORD/64/65 GOVERNMENT OF/INDIA MINISTRY OF PETROLEUM & CHEMICALS (Department of Chemicals) New Delhi, the 21st December 1965 To Shri Satish Chandra, Chairman & Managing Director, 711 Fertilizer Corporation of India Ltd., F 43, New Delhi South Extension, Pt.
I, New Delhi.
Subject : Bonus payable to employees in the Public Sector undertakings.
sir I am directed to refer to the payment of Bonus Act, 1965 (No. 21 of 1965) which provides for the payment of bonus to persons employed in certain establishments and for matter connected therewith. "Establishment in public sector" is defined in section 2(16) of the Act.
Further, sub section (1) of section 20 lays down that if in any accounting year an establishment in public sector sells any goods produced or manufactured by it or renders any services, in competition with an establishment in private sector, and the income from such sale or services or both is not less than twenty per cent of the gross income of the establishment in public sector for that year, than the provisions of this Act shall apply in relation to such employment in public sector as they apply in relation to a like establishment in private sector.
It follows that the provisions of the Act do not apply to such of the establishments in private sector.
Notwithstanding the provisions 'of the Act, it has been decided by Government as a matter of policy that noncompetitive public sector undertaking should also make ex gratia payments to their employees of the minimum of 4 (four) per cent of annual gross earnings of the employees on the same lines as bonus will be payable by public sector undertakings falling within the provisions of the aforesaid Act.
The benefit of six year bonus holiday (vide section 10 of the Act) should be available to noncompetitive public sector undertakings.
Government have further decided that the following should be the guiding principles for determining the quantum of ex gratia payments to employees of noncompeting public sector undertakings: (i) all non competing public sector undertakings should pay ex gratia to their employees amounts which they would be liable to pay as bonus if they were to fall within the purview of the ; (ii) where such an undertaking has made ex gratia payment in the past, the amount of such payment should be treated as absorbed in the amount determined as 712 in (i) above.
In other words, any claim of employees to payment determined on the lines of the Bonus Law as an addition to payment on the scale of ex gratia payments in the past, should not be accepted.
If the past ex gratia payment had been higher than the amount as worked out as in (1 ) above, the level of past ex gratia payment should be maintained; (iii) the principle in (ii), above, shall also be followed in the case of competing public sector undertakings; and (iv) the applicability of (ii) and (iii) above should be conditional upon the maintenance of the level of performance of the undertaking in individual cases.
It is requested that the decisions of Government referred to, may be noted for guidance and necessary action.
Yours faithfully, Sd/ Nakul Sen Secretary to Govt.
of India.
" Again, on September 9, 1966 the appellant issued a circular regarding payment of bonus for the year 1965 66.
It is stated therein that the management has decided to pay bonus to the employees of the Nangal unit for the year 1965 66 and that statutory bonus equivalent to 4% of basic pay and dearness allowance would be paid strictly in accordance with the provisions of the Bonus Act, 1965.
It is further mentioned that in addition to this bonus it has been decided to pay production bonus at 3% of wages to employees whose maximum scale of pay does not exceed Rs. 1,400/ per mensem.
Then the letter proceeds to state as to how exactly the production bonus is to be calculated and paid.
The circular further states that in addition to the statutory bonus and production bonus the employees will also be paid 4 days ' wages in the form of advance production bonus to be adjusted as and when total bonus payable to the workers exceeds 30 days ' wages in future.
There was a note appended to this circular on the subject of bonus payments, for the information of workers.
That note proceeds to state that as production for the year 1962 63 exceeded the target the management has decided to pay ad hoc bonus equivalent to a month 's salary for employees drawing up to Rs. 580/ per month.
For the year 1963 64 the employees were entitled to the minimum bonus of 4%, according to the recommendations of the Bonus Commission and that amount of bonus was paid.
Though legally the workmen were not entitled to anything more, nevertheless, as the Nangal unit again exceeded the production 713 target for the year 1963 64, the management decided to give an ex gratia payment for good performance so that the bonus as per the Bonus Commissions Report plus the ex gratia payment worked out to a month 's wage.
But during the year 1964 65 the production exceeded the target and the management decided to pay, in addition to the bonus payable under the Ordinance a performance reward equivalent to half a month 's wages.
The management was considering to introduce a production bonus scheme to provide an incentive for increased production.
This became necessary in view of the advice given by the Labour Law Officer of the company that ex gratia payments should be avoided.
The management further states that production bonus scheme has been approved by the Government of India and under that scheme employees are entitled to sums varying from 3% to 3.5% of their wages.
In the year 1965 66 the production had not exceeded the target and the employees of Nangal unit became entitled only to the statutory bonus of 4% of their wages, under the Bonus Act and production bonus was not admissible.
Ex gratia payment also was ruled out in view of the advice of the Labour Officer and because of the fact that with the introduction of production bonus scheme all ex gratia payments stood eliminated.
But, inasmuch as the workers in the Nangal unit have maintained peace and good industrial relations, the management decided, as a special case, to award production bonus of 3% under the production bonus scheme.
The note summed up the position by stating that for the year 1965 66 the Nangal workers were eligible to (a) statutory bonus at 4% of the annual wages under the Bonus Act; (b) production bonus at 3% of the annual wages and (c) 4 clays ' wages in the form of advance production bonus to give the workmen a month 's wages in all, which was to be adjusted as and when the total bonus payable to the workers exceeds 30 days ' wages in future.
From the circular letters dated September 27, 1965 and September 9, 1966 it will be seen that the management offered to pay only the statutory bonus under the Ordinance and the Bonus Act and that ex gratia payment of bonus has been discontinued.
In particular, in the note annexed to the circular of September 9, 1966 the management has taken the specific stand that a production bonus scheme has been introduced and that the said scheme has been approved by the Government of India.
They also maintained that with the introduction of the production bonus scheme all ex gratia payments are eliminated.
As the appellant did not pay bonus for the years 1964 65 and 1965 66 at the rate at which it was paid for the year 1963 64, 714 the Union submitted a charter of demands to the appellant on August 19, 1966.
The Union demanded that bonus should be paid for the years 1964 65 and 1965 66 at the same rate as it had been paid in previous years and that the appellant was bound to act according to the decision of the Central Cabinet dated December 2, 1965 and communicated to it by the circular letter of the Government of India dated December 21, 1965.
That is, according to the Union the minimum bonus that a worker was entitled to get was Rs. 110/ .
There were certain other demands which are not necessary to consider in this appeal.
By this letter the Union also indicated that if the demands were not met within 15 days, it would be forced to adopt agitational approaches to seek compliance with its demands.
The management did not comply with this demand regarding payment of bonus and attempts at mediation failed and the workmen went on strike from October 17, 1966 and the reference to adjudication was made on November 2, 1966.
Before the Tribunal the workmen pressed their claim for bonus on the basis contained in their charter of demands.
They also raised the plea that the introduction of production bonus scheme had no effect regarding the ex gratia payment of bonus made by the appellant.
As the management had not complied with the reasonable demands of the labour and as it was acting in violation of the Cabinet decision, the workmen were justified in going on strike from October 17, 1966 and they were entitled to full wages for the strike period.
The appellant resisted the claims of the Union.
They raised certain objections regarding the jurisdiction of the Industrial Tribunal to entertain the suit, but that again is not the subject.
of the present appeal.
The management pleaded that the claim for bonus for the years 1964 65 and 1965 66 had to be considered and adjudication made only according to the provisions of the Bonus Act and that the workmen were not entitled to claim anything beyond what was provided in the said Act.
No legal claim could be based on ex gratia payments of bonus in the previous years.
They accepted the position that under article 110 of the Articles of Association of the company the President of India could issue direction which become binding on the company, but pleaded that no such directive had been issued by the President.
Even assuming that such direction had been issued by the President to the company, the workmen, who were third parties, could not seek to enforce any rights based upon such directives.
The appellant Corporation is a public limited company and as such an autonomous statutory body.
They further pleaded that the rate of bonus mentioned in the Cabinet decision would become payable only if the level of performance or production was properly 715 maintained and in the case of the Nangal unit the level had not been kept up.
The management further averred that in consultation and with the approval of the Central Government the appellant introduced the production bonus scheme with effect from 1965 66 and the said scheme replaced the previous system of ex gratia payments, made on ad hoc basis for the initial two years of the Nangal Unit 's operation.
The production bonus is payable in addition to the statutory bonus which the workmen are entitled to under the Bonus Act.
As the Central Government had approved the scheme of payment of statutory bonus and production bonus, in lieu of the past system of making ex gratia and ad hoc payments, the management pleaded that the Cabinet decision of December 2, 1965 stood modified to that extent.
Regarding the treating of the 4 days ' advance bonus paid for the year 1965 66 as deductible from bonus payable in future years and management pleaded that in order to keep industrial peace and as the new production bonus scheme substituting the old ex gratia payment had come into force the appellant decided to pay advance bonus of 4 days wages.
This advance bonus was specifically stated as being deductible when the total bonus payable to workers in future years exceeded 30 days.
Therefore the management averted that they were entitled to adjust this advance payment in future years.
The management further pleaded that there was absolutely no justification for the workmen starting agitation from August 27, 1966 nor for going on strike from October 17, ' 1966.
The conciliation proceedings started under the Act had not terminated and the appellant also was participating in the conciliation proceedings and was anxious to meet the demands of the workmen if it was otherwise possible.
The production bonus scheme for the year 1965 66 had been announced on September 9, 1966.
The strike was both illegal and unjustified and hence the workmen were not entitled to any wages during the strike period.
The Industrial Tribunal in its award has held that the appellant was bound to comply with the Cabinet decision dated December 2, 1965 and communicated to it by the Government by its Circular letter dated December 21, 1965.
The decision of the Central Cabinet had been publicly announced by the Minister concerned in the Lok Sabha on December 9, 1965.
The principles laid down for ex gratia payments by non competitive public sector undertakings had been made applicable to competitive public sector undertakings also.
The Tribunal held that as the appellant was a competitive public sector undertaking and the directions regarding ex gratia payments of bonus as well as the prin 716 ciples for determining the quantum of such payments had all been laid down in the Circular letter of December 21, 1965 and the appellant was bound to implement those directions, the claim of the labour for such payments for the years in question was perfectly justified.
The ex gratia payment to be made under the Cabinet decision was to be in accordance with the level of past ex gratia payments.
No doubt such payments were to be made provided the level of performance was maintained.
On the materials placed before it, the Tribunal held that the said condition was satisfied.
The Tribunal rejected the claim of the appellant that production bonus scheme was introduced in consultation and with the approval of the Central Government and it further held that the introduction of that scheme was not in lieu of the ex gratia payments made on an ad hoc basis in the previous years.
The Tribunal has further held that as the decision of the Central Cabinet, dated December 2, 1965 stands and has not been modified in any way by the Government, the management was bound to continue the ex gratia payments.
It further held that the striking down, by this Court, of sub section
(2) of section 34 of the Bonus Act had no effect on the claim made by the Union because the claim of the Union was sufficiently safeguarded by sub section
(3) of section 34.
Ultimately the Tribunal accepted the claim of the workmen for payment of minimum bonus for the years 1964 (35 and 1965 66 being fixed at Rs. 110/ and regarding the maximum the Tribunal held that was a matter of calculation, having regard to the wages of an employee; but it restricted its direction in this regard to the two years in question and declined to express any opinion regarding future years.
The Tribunal also negatived the claim of the appellant to treat the 4 days ' bonus paid in advance for the year 1965 66 as deductible from the bonus payable in future years.
Regarding the wages claimed by the workmen for the period October 17 to October 31, 1966, the Tribunal held that the strike was both legal and justified and it directed the management to pay the workmen half their wages for that period.
The same stand that has been taken before the Tribunal by the parties has been urged before us by Mr. Gokhale, the learned counsel for the appellant management and Mr. A.K. Sen, the learned counsel for the Union.
We shall first consider the correctness of the decision of the Industrial Tribunal regarding the claim of the workmen for ex gratia payment of bonus.
We are not inclined to accept the contention of Mr. Gokhale that the appellant was not bound to implement the directions contained in the Circular letter of the Government dated December 21, 1965, containing the Cabinet deci 717 sion of December 2, 1965, nor his further contention that the claim of the workmen for bonus should have been adjudicated upon exclusively as per the provisions of the Bonus Act without reference to the Cabinet decision.
The appellant company, registered under the , is no doubt an autonomous unit; but there are several articles in the Articles of Association of the appellant Corporation which give power to the President of India and the Central Government to give directions in the working of the appellant.
In fact, it may not be necessary to deal elaborately with this matter as the, appellant itself, in sub paragraph (1) of paragraph 8 of its reply dated January 25, 1967 filed before the Industrial Tribunal, has categorically admitted the position that trader article 110 of the Articles of Association of the company the President of India can issue directives which become binding on the company; but the stand taken therein is that no such directive was ever issued by the President.
The further stand taken by the appellant is that the production bonus scheme was introduced with the consent and approval of the Central Government and that, on its introduction, the ex gratia payments of bonus were eliminated and, to that event, the decision of the Central Cabinet, dated December 2, 19.65 stood modified.
Even in respect of the Central Cabinet decision, relied on by the Union, the stand taken by the appellant, in its letter dated September 21, 1966 to the Chief Conciliation Officer, Punjab was that the Nangal unit had not 30 far received any instructions from the controlling Ministry regarding the Cabinet decision and that the position with regard to the Cabinet decision would be checked up by the management with their Head Office and the Ministry.
Therefore, it will be seen that it was not the case of the appellant that it will not be bound by the Cabinet decision, if the decision was there as a fact.
We will only refer to articles 67 and 110 of the Articles of Association of the appellant.
Under article 67 the Board of Directors of the company are entitled to exercise all such powers and to do all such acts and things as the company is authorised to exercise and do, but subject to the provisions of the Act and the directives, if any, the President may issue from time to time as contained in article 110.
Article 110 is as follows: "110.
Notwithstanding anything contained in any of these articles, the President may, from time to time, issue such directives as he may consider necessary in regard to the conduct of the business of the Company or Directors thereof and in like manner may vary and annul any such directive.
The Directors shall give immediate effect to directives so issued.
" Reading the two articles together, the position is very clear that the exercise of the powers of the Board of Directors of the com 4 Sup.
C1/69 13 718 pany are, apart from other restrictions, subject to the directives, if any, issued by the President from time to time, with regard to the conduct of the business of the company or Directors.
Any direction given by the President may, in like manner, be varied and annulled.
The Directors are bound to give immediate effect to the directives so issued.
As we are of opinion that the draft letter of October 14, 1966 (which is discussed later on by us) constitutes an offer made by the appellant to the workmen to opt for payment of bonus either according to the Cabinet decision or according to the production bonus scheme, it becomes unnecessary for us to investigate the nature of the power that is exercised either by the President or the Central Government when giving directions to the appellant company, under the Articles of Association.
For the same reason the question as to whether the circular letter of the Central Government, dated December 21, 1965 is a direction or order, as envisaged by the Articles of Association, does not also arise for consideration.
The decision of the Central Cabinet dated December 2, 1965 has been announced by the Minister in the Lok Sabha on December 9, 1965 and this decision has been communicated to the appellant by the concerned Ministry by Circular letter dated December 21, 1965.
There is no controversy that if the Cabinet decision is given effect to, the claim of the workmen for ex gratia payment of bonus as in previous years will have to be accepted, unless the appellant is able to establish its plea that the production bonus scheme was introduced with the consent and approval of the Central Government in lieu of ex gratia payments of bonus.
As to whether the appellant has succeeded in establishing this plea is an aspect which will be adverted to by us at a later stage.
In this case it is not necessary to consider the wider question as to how far, without anything else, the workmen would be able to lay any claim on the basis of any decision communicated by the Government to the appellant alone.
As pointed out by Mr. Sen, it is clear that the Central Cabinet 's decision was made known to the workmen who were given the option either to accept the Cabinet decision, as conveyed to the appellant by the Circular letter of December 21, 1965 or the production bonus scheme as formulated by the appellant Corporation.
Mr. Sen, the learned counsel for the Union, has invited our attention to the draft of a letter, dated October 14, 1966, which was intended to be sent by the workmen to the appellant.
That letter, which is addressed to the appellant Corporation, states: 719 "You have given us the option of accepting either the Cabinet decision conveyed to you vide Department of Chemical 's letter No. CH/COORD/64/65 dated 21st December 1965, the terms of which are annexed to this letter, or the Production Bonus Scheme as formulated by the FCI Board . " That the Circular letter of December 21, 1965 of the Government was made known to the workmen is clear from the evidence of the appellant 's witness R.W. 7 Shri Wadehra.
He has categorically stated that he joined the discussions between the representatives of the workmen and the Managing Director of the appellant corporation which took place at Delhi on October 15, 1966.
He further states that he came to know at that time that on October 14, 1966, during the discussions between the labour and the management at which he was not present, the workmen 's representatives had desired that the Cabinet 's directions may be made applicable to them with regard to bonus.
This witness further states that the Managing Director made an offer during the discussions and that offer is contained in the draft letter dated October 14, 1966, to which we have already referred.
The witness further states that the workmen declined to accept the offer of the management to opt for the production bonus scheme.
His evidence clearly shows that the management has communicated to the workmen the Cabinet decision, as conveyed by the Circular letter of the Government dated December 21, 1965.
This evidence further makes it clear that the workmen declined to opt for the production bonus scheme, but, on the other hand, insisted that bonus must be paid to them according to the Cabinet 's decision.
Mr. Gokhale attempted to explain away the effect of the draft letter of October 14, 1966 by urging that the Cabinet decision has been communicated only after the Union had submitted its charter of demands as early as August 19, 1966.
So long as the Cabinet decision has been communicated and option was given to the workmen, it does not in our opinion matter at what stage the communication was made to the labour.
Under the circumstances, it is idle for the management to contend either that the appellant is not bound to comply with the Cabinet decision or that the workmen are not entitled to make any claim on the basis of that decision.
That leaves us with the alternative contention, raised by the management, that production bonus scheme was introduced with the consent and approval of the Central Government and that on its introduction the ex gratia payment of bonus stood eliminated.
No doubt this is the stand that has been taken in the note attached by the appellant in its Circular letter dated September 9, 1966.
720 we have already adverted to that note in the earlier part of our judgment.
No materials, whatsoever, have been placed by the appellant in support of this contention.
The production bonus scheme itself does not state that it is in lieu of all other ex gratia payments.
There is no order of Government on record to show that the Circular letter of December 21, 1965 has been modified by the Government in any manner whatsoever.
The only evidence relied on by the appellant in this connection was the statement of R.W. 7, Shri Wadehra.
He says that after a full consideration of all the relevant factors and in consultation and with the approval of the Central Government, a production bonus scheme was introduced by the appellant with effect from the year 1965 66 and that he was himself present at a meeting in the Ministry when a decision was taken that the Corporation might introduce the production bonus scheme and that the workmen should be paid production bonus in addition to the bonus payable under the Bonus Act.
He further speaks to the fact that production bonus scheme replaced the ad hoc ex gratia bonus made in the past years.
Excepting this bare statement in the oral evidence, no order of the Central Government to this effect, or modifying its previous decision, has been placed before the Tribunal.
Under those circumstances, the Tribunal was perfectly justified in holding that the appellant has not established that on the introduction of the production bonus scheme, all payments of ex gratia bonus ceased.
The striking down of sub section
(2) of section 34 of the Bonus Act, by this Court, has no effect, as rightly held by the Tribunal, in recognising the claim of the workmen.
When once it is established, as in this case.
that the Cabinet decision regarding ex gratia payment of bonus has been communicated to the workmen with an option to accept the said decision or the production bonus scheme and the labour wanted the Cabinet decision to be implemented.
it follows that an agreement, under section 34(3) of the said Act has come into effect and it is valid.
Hence we are in agreement with the views expressed by the Tribunal that the ex gratia payments, claimed by the workmen, are saved by sub section
(3) of section 34 of the Bonus Act.
There was a feeble argument, attempted to be raised by Mr. Gokhale, that the application of the Cabinet decision is conditional upon the maintenance of the level of performance of the undertaking in individual cases.
The Tribunal has held that the level of performance of workmen, in the years in question, has been maintained.
In this connection, among other matters, it has referred to a statement made in the April May 1966 issue of the "FCI News", a journal published by the appellant.
This journal is issued after the year has come to an end and there is a state 721 ment to the effect that the Nangal Fertilizer factory has exceeded the revised production targets fixed for Calcium Ammonium Nitrate (CAN) and Heavy Water and the said performance, despite the serious handicap suffered because of the severe power cuts enforced since November 1965, was commendable.
We are satisfied that the finding recorded by the Tribunal, on this point, is justified.
Once it is held, as we do, in agreement with the Tribunal, that the appellant was bound to implement the Circular of the Central Government, dated December 21, 1965, it follows that the appellant was bound to pay the ex gratig, payment of bonus, as claimed by the workmen for the years in question and that the appellant is further not entitled to deduct the advance wages of 4 days paid for the year 1965 66.
The decision of the Tribunal, on this aspect is correct and is affirmed.
Before we take up the question regarding the wages for the strike period, it is necessary to give a clarification regarding an observation made by the Tribunal regarding the production bonus scheme.
While discussing the claim of the Union regarding ex gratia payment of bonus as per the Cabinet decision, the Tribunal has observed .that the production bonus scheme introduced by the appellant is in addition to the ex gratia payment which the workmen are entitled to We do not express any opinion regarding the correctness or otherwise of this view of the Tribunal, excepting to state that the opinion expressed by the Tribunal was uncalled for and outside the scope of the reference.
This leaves us with the question of the claim of labour for wages for the strike period from October 17 to October 31, 1966.
The Tribunal has held that the strike was both legal and justified and it has awarded the workmen half the wages for that period.
This finding of the Tribunal is attacked on behalf of the appellant by Mr. Gokhale.
The learned counsel did not urge that the strike was illegal.
, but on the other hand he pressed before us that the strike was thoroughly unjustified and the finding of the Tribunal was contrary to the evidence on record and also perverse.
The counsel urged that various items of evidence which have a very vital bearing on a consideration of this question had not been adverted to at all by the Tribunal.
On the other hand Mr. Sen, learned counsel for the Union, pointed out that the Union made various attempts ,for having its claim regarding bonus amicably settled with.
the management.
The management would not even agree to implement the directions given by the Central Government.
It was very evasive in its replies when pressed to act upon the Cabinet decision.
Several mediation talks were held and conciliation also failed.
Therefore, under those circumstances, the workmen honestly felt that a responsible body like the appellant was not 722 amenable to reason and hence a sense of frustration set in and in consequence the workmen went on strike to draw the pointed attention of the management to the demands made by the Union.
Under those circumstances, the counsel urged that the workmen 's going on strike was justified and the Tribunal had also awarded only half wages for that period.
Counsel urged that this finding had been arrived at on a proper consideration of the materials available before the Tribunal.
We are not satisfied that the Tribunal has properly considered and adverted to the relevant evidence on record before it came to a finding in favour of the workmen.
The Union submitted a charter of demands on August 19, 1966.
One of the demands related to the payment of bonus for the years 1964 65 and 1965 66 at the same rate at which it was paid for the previous years.
The Union has stated that the workmen will resort to coercive measures if the demands are not complied with within 15 days.
The period of notice given should have expired on September 3, 1966.
By that time the Conciliation Officer had intervened and he sent a letter, dated August 30, 1966 to the management and the Union that he had taken up the dispute for the purpose of conciliation and requested both ' the management and the Union to attend the conciliation proceedings on September 14, 1966.
In the meanwhile the Union had started agitation on September 3, 1966 by starting a general hunger strike and actually on September 5, 1966 a 96 hour hunger strike was also resorted to This appears to have continued till September 12, 1966.
The appellant announced on September 9, 1966 the introduction of the production bonus scheme with effect from 1965 66 and also indicating the circumstances under which the ex gratia payment of bonus was being made on prior occasions and as to why it was being discontinued.
The hunger strike by Shri Ramthirtha, the President of the Union, was commenced from September 12 and continued till September 17, 1966.
The conciliation proceedings which had been posted to September 14, 1966 could not be taken up on that day as the Officer was on tour.
On September 17, 1966 the workmen started a one hour strike in each of the shifts.
The Chief Conciliation Officer intervened and he fixed a meeting for September 20, 1966.
The appellant management gave a written statement to the said officer on September 21, 1966 setting out its stand in reply to the demand made by the workmen.
They referred,, in this written statement, to the Circular issued by them on September 9, 1966 regarding the principles governing the payment of bonus.
The management also stated that the Nancy unit had not received instructions from the Controlling Ministry regarding the Cabinet 723 decision and that it would check up with the Head Office and the Ministry about this matter.
Nevertheless, on October 3, 1966, Shri Ramthirth, the President of the Union and his group started an agitation that the management had gone behind its commitments.
On October 12, 1966 the Chief Conciliation Officer again visited Nangal and had discussion with the representatives of the management and the Union and this continued till October 15, 1966.
Shri Wadehra, R.W. 7, speaks to these facts and he also states that Shri Amarnath Vidhyalankar, a Member of Parliament, attended the proceedings on October 15, 1966 on behalf of the workmen.
Shri Wadehra, in his affidavit dated June 24, 1967 has again stated that the Chief Conciliation Officer invited representatives of the workmen to come to Delhi to discuss the matter with the higher authorities of the appellant Corporation.
Shri Wadehra further states that he himself joined the negotiations which took place at Delhi from October 15, 1966 and that the said negotiations were attended by the Managing Director & Chairman on behalf of the appellant and Mr. Vidhyalankar attended the proceedings along with certain other representatives of the workmen.
Mr. Wadehra further states that on the evening of October 15, 1966 the workmen 's representatives intimated that they would discuss the outcome of the negotiations at Delhi with the general body of the workmen at Nangal, the next day, and then return to Delhi and report the reaction of the workmen regarding the proposals discussed during the negotiations.
But, instead of keeping this promise the representatives of workmen addressed a public meeting on the evening of October 15, 1966 and incited the workmen to strike work from October 17, 1966.
The strike was actually commenced from October 17.
Mr. Wadehra also stated that a telegram from the Secretary of the Labour Ministry inviting all the parties to attend the conciliation meeting at Chandigarh on October 17, 1966 was received but the labour did not care to attend that meeting.
We have referred to some of the incidents which have taken place prior to October 17, 1966 only to show the attitude that the labour was adopting in respect of their demands.
There is a further circumstance that a telegram, dated October 13, 1966 had been sent by the Labour Commissioner fixing conciliation proceedings for October 17, 1966, at Chandigarh and a telegram was also sent by Shri Vidhyalankar, who was representing the workmen, to the Union President request his to stay the strike for a day.
So far as the telegram stated to have been sent by Shri Vidhyalankar, the receipt of the same is admitted, but the Union is not prepared to accept the receipt of the telegram, dated October 13, 1966 stated to have been sent by the Labour Commis 724 sioner.
We will presently show that the plea of the Union in this regard cannot be accepted because there is sufficient evidence on record to show that the telegram had been sent by the Labour Commissioner and must have been received by the President of the Union.
We have already referred to the statement of Shri Wadehra about the receipt, by the management, of the said telegram fixing conciliation proceedings for October 17, 1966.
The telegram is Exhibit RW 3/1 which is dated October 13, 1966 and sent from Chandigarh.
The telegram is sent to the appellant and to the Union.
The Labour Commissioner requests the attendance of the parties to the conciliation meeting on October 17, at 11 a.m.
Exhibit R.W. 14 is a letter dated October 13, 1966 sent ' by the Labour Commissioner to the appellant and the unions concerned, containing a copy of the telegram sent by him on that date regarding the conciliation proceedings being fixed on October 17, at Chandigarh and requesting the parties to appear before him.
That the said telegram and letter have been sent is proved by the evidence of R.W. 1 who is an Assistant in the Labour Commissioner 's Office at Chandigarh and who has produced the necessary file pertaining to the same.
That the telegram sent by the Labour Commissioner has been delivered is also proved by R.W. 3 who has produced the delivery sheets in respect of the telegram.
Relying upon these circumstances, quite naturally Mr. Gokhale strenuously urged that the receipt of the telegram issued by the Labour Commissioner is purposely denied by the Union to profess ignorance about the conciliation proceedings being taken up on October 17, 1966, because the Union was in no mood to participate in those proceedings.
Mr. Sen, no doubt relied upon the evidence of the workmen 's witness No. 3, Shri Ramthirtha, President of the Union, that no telegram was received from the Labour Commissioner regarding conciliation proceedings to take place on October 17, 1966, but this witness himself accepts that the telegram sent by Mr. Vidhyalankar was received by him.
We are inclined to accept the contention of Mr. Gokhale that the denial by the Union of the receipt of the telegram sent by the Labour Commissioner cannot be accepted.
Mr. Gokhale, learned counsel, referred us to the decision of this Court in The Managemnt of Chandramalai Estate, Erna Kulam vs its Workmen (1) and particularly to the following observations at p. 455: (1) ; ' 725 "While on the one hand it has to be remembered that strike is a legitimate and sometimes unavoidable weapon in the hands of labour it is equally important to remember that indiscriminate and hasty use of this weapon should not be encouraged.
It will not be right for labour to think that for any kind of demand a strike can be commenced with impunity without exhausting reasonable avenues for peaceful achievement of their objects.
There may be cases where the demand is of such an urgent and serious nature that it would not be reasonable to expect labour to wait till after asking the Government to make a reference.
In such cases, strike even before such a request has been made may well be justified ." Mr. Gokhale urged that there was absolutely no urgency in the case before us because the management was prepared to pay the bonus as admitted by them and the controversy was really regarding the additional ex gratia payment.
Further, counsel pointed out that the Conciliation Officer had not made any report about conciliation having failed and in fact the telegram sent by the Labour Commissioner as late as October 13, 1966 clearly showed that he was still 'continuing the proceedings.
Counsel also pointed out that after having separated from the Delhi meeting on October 15, 1966, promising to consider the proposals put before it by the management and communicate the same to the management, the leaders of the workmen incited them to go on strike at the meeting held the very next day and actually the strike itself commenced from October 17, 1966.
No doubt Mr. Sen, learned counsel, pointed out that there was nothing for the management to consider in their meeting the demands of the workmen, because the Cabinet decision was well known.
He also urged that the workmen obviously felt that the management was not adopting a reasonable attitude and hence they resorted to a strike, which was justified under the circumstances.
We may also indicate that there is evidence, let in by the management, to show that during the strike period and even prior to that, several of the workmen resorted to violence and other acts of indecency.
Evidence has also been let in to show that the workmen continued to strike even after a notification, dated October 31, 1966 was issued by the President of India prohibiting the strike and requiring the workers to report for duty.
We do not propose to dwell on these matters, because we have only to consider the justification or otherwise of the strike from October 17 to October 31, 1966.
The management was prepared to pay at all times the bonus as per the Bonus Act.
They had also announced on September 726 9, 1966 the introduction of the production bonus scheme.
They were actively taking part in the conciliation proceedings.
The appellant also made to the Union certain proposals on October 15, 1966 at the conference held at Delhi which 'proposals ' the representatives of the workmen promised to discuss with the workmen and give a reply to the appellant.
But, on October 16, 1966, at a meeting of the workmen, they were incited to go on strike.
The receipt of the telegram of October 13, 1966 of the Labour Commissioner, fixing October 17, 1966 for further discussions and inviting the Union and the management to attend the meeting, is falsely denied by the Union.
The receipt of Sri Vidhyalankar 's telegram requesting the Union to put off going on strike by one day is admitted by the President of the Union, but that request was not complied with by the workmen.
Sri Vidhyalankar, it must be remembered, was representing the workmen in certain conciliation meetings.
All these circumstances clearly show that the demand of the Union regarding ex gratia bonus cannot be considered to be of an 'urgent and serious nature '.
They also show that the launching of the strike was unjustified.
It therefore follows that the workmen are not entitled to any wages for the period of the strike viz., from October 17 to October 31, 1966.
To this extent the award of the Industrial Tribunal will have to be set aside.
In the result, we set aside the award of the Industrial Tribunal in so far as it directs the appellant to pay the workmen half the wages for the strike period from October 17 to October 31, 1966; and, to that extent, the appeal is allowed.
In other respects the appeal will stand dismissed.
As the appellant has failed on the substantial question, it wilt pay the costs of the respondent workmen.
Y.P. Appeal partly allowed.

summary:
For the first year of production by a unit of the appellant Corporation (a Central Government Undertaking), it granted ad hoc bonus for good performance to the unit 's employees.
For the next year, the appellant granted bonus as recommended by the Bonus.
Commission and also made ex gratia payment for good performance.
The appellant decided to pay bonus for the third year, strictly in accordance with the Payment of Bonus Ordinance and the Act, which had come into force then.
The Central Minister announced in the Lok Sabha that with the specific approval of the Central Cabinet ex gratia payments had been allowed in the past by way of bonus to the employees and this was communicated by the Government of India by a letter.
In the fourth year the production did not exceed the target, and the appellant offered to pay only the statutory bonus under the Bonus Ordinance and Act 'and stated that a production scheme had been introduced, that with the introduction of the production bonus scheme all ex gratia payments were eliminated and that this scheme was approved by the Government of India.
The workmen demanded that the bonus should be paid for the third and fourth years at the same rate as it had been paid in previous years and the appellant was bound to act according to the decision of the Central Cabinet and communicated by the letter.
The workmen also stated that if their demands were not met within 15 days, they would be forced to adopt agitation approaches.
Conciliation proceedings started.
The appellant offered the workmen the option of either accepting the Cabinet decision or the production Bonus Scheme as formulated by the management.
The workmen desired that the Cabinet 's directions be made applicable to them, declined the offer to opt for the production bonus, and prepared a draft of a letter which was intended to be sent by the workmen to the appellant stating that the offer was also made.
The workmen went on strike and the reference to adjudication was made.
The Tribunal accepted the claim of the workmen, and held that the strike was justified.
HELD: (i) The appellant failed to establish that production bonus scheme was introduced with the consent and approval of the Central Government and that on its introduction the ex gratia payment of bonus stood eliminated.
The evidence established that the Cabinet 's decision was made known to the workmen, who were given the option either to accept the Cabinet decision or the production bonus scheme as formulated by the 'appellant.
So long as the Cabinet decision had been communicated and option was given to the workmen, it did not matter at what stage the communication was made to the labour.
The fact that the communication of the 707 Cabinet decision after the submission of the charter of demands was of no consequence.
The striking down of section 34(2) of the Bonus Act by this Court has no bearing in considering the claim of the.
respondent in this case.
When once it was established, as this case, that the Cabinet decision regarding ex gratia payment of bonus had been communicated to the workmen with an option to accept the said decision or the production bonus scheme and the labour wanted the Cabinet decision to be implemented, it followed that an agreement, under section 34(3) of the said ' Act had come into effect and it was valid.
[720] Therefore, the workmen were entitled to ex gratia payment of bonus as in the previous years.
(ii) The management was prepared to pay at all times the bonus as per the Bonus Act.
They had also announced the introduction of the production bonus scheme.
They were actively taking part in the conciliation proceedings.
The appellant also made to the Union certain proposals at the conference which 'proposals ' the representatives of the workmen promised to discuss with the workmen and give a reply to the appellant.
But, at a meeting of the workmen next day, they were incited to go on strike.
The receipt of the telegram sent by the Labour Commissioner fixing a date for further discussions and inviting the Union and the management to attend the meeting, was falsely denied by the Union.
The receipt of a telegram from a person representing the workmen at conciliation meeting, requesting the Union to put off going on strike by one day was admitted by the President of the Union, but that request was not complied with by the workmen.
All these circumstances clearly established that the demand of the Union regarding ex gratia bonus could not be considered to be of an 'urgent 'and serious nature '.
They also showed that the launching of the strike was unjustified.
[725 H] Therefore, the workmen were not entitled to any wages for the period of strike.


judgement:
iminal Appeal No.159 of 1966.
Appeal by special leave from the judgment and order dated November 24, 1965 of the Bombay High Court in Criminal Misc. "Application No. 323 of 1965.
S.C. A garwala, for the appellant.
M.S.K. Sastri and S.P. Nayar, for the respondent.
The Judgment of the Court was delivered by Grover, J.
This is an appeal from the judgment of the Bombay High Court passed in exercise of ordinary original civil jurisdiction by which the ,appellants were found guilty of having committed contempt of Mr. Justice Tarkunde in his judicial capacity and of the court.
Appellant No. 2 D.R. Goel, who is the Editor, Printer and Publisher of Perspective Publications (P) Ltd. appellant No. 1, was sentenced to simple imprisonment for one month together with fine amounting to Rs. 1,000/ , in default of payment of fine he was to undergo further simple imprisonment 781 for the same period.
The appellants were also directed to pay the costs incurred by the State.
On behalf of the first appellant it has been stated at the bar that the appeal is not being pressed.
The background in which the impugned article was published ' on April 24, 1965, in a weekly periodical called "Mainstream" which is a publication brought out by the first appellant may be set out.
In the year 1960 a suit was filed by one Krishnaraj Thackersey against the weekly newspaper "Blitz" and its Editor and others claiming Rs. 3 lacs as damages for libel.
The hearing in that suit commenced on the original side of the Bombay High Court on June 24, 1964.
The delivery of the judgment commenced on January 19, 1965 and continued till February 12, 1965.
After June 24, 1964, that suit was heard from day to day by Mr. Justice Tarkunde.
The suit was decreed in the sum of Rs. 3 lacs.
An appeal is pending before a division bench of the High Court against that judgment.
The impugned article is stated to have been contributed by a person under the name of "Scribbler" but appellant No. 2 has taken full responsibility for its publication.
Its heading was "STORY OF A LOAN and Blitz Thackersey Libel Case".
It is unnecessary to reproduce the whole article which appears verbatim in the judgment of the High Court.
The article has been ingeniously and cleverly worded.
The salient matters mentioned in the article are these: After paying a tribute to the Indian judiciary the writersays that according to the report in "Prajatantra" a Gujarati paper architects Khare Tarkunde Private Limited of Nagpur, hereinafter called "Khare Tarkunde" (which is described a Firm in the article) got a loan facility of Rs. 10 lacs from the Bank of India on December 7, 1964.
The partners of Khare Tarkunde included the father, two brothers and some other relations of Justice Tarkunde who awarded a decree for Rs. 3 lacs as damages against Blitz and in favour of Thackersey.
It is pointed out that the date on which Rs. 10 lacs loan facility was granted by the Bank of India was about five and a half months after the Thackersey Blitz libel suit had begun and just over six weeks before Justice Tarkunde began delivering his "marathon judgment" on January 19, 1965.
It is then said that for Rs. 10 lacs loan facility granted to Khare Tarkunde, the New India Assurance Co. stood guarantee and that the two Directors of the Bank of India who voted in favour of the credit of Rs. 10 lacs being granted to Khare Tarkunde were Thackersey and Jaisinh Vithaldas (believed to be a relative of Thackersey).
Next it is stated that one of the Directors of the New India Assurance that stood guarantee for the loan facility was N.K. Petigara, who was also a senior partner of M/s. Mulla & Mulla Craigie Blunt & Caroe, Solicitors of Thackersey in the Blitz Thackersey Libel Case before Justice Tarkunde 4 Sup.
CI/69 17 782 Emphasis is laid on the fact that Khare Tarktunde had a capital of Rs. 5 lacs only and the balance sheet of the firm of June 1964 revealed indebtedness to various financiers to the tune of Rs. 14 lacs.
Thus Khare Tarkunde is stated to be "lucky to get against all this a handsome loan of Rs. 10 lacs from the Bank of India".
The writer refers to the Code among college teachers and university professors of not examining papers when their own children and near relatives sit for examination and adds that Justice Tarkunde himself will recognize the rightness of such a Code.
Referring to the unimpeachable integrity and reputation of judges of the Bombay High Court, the writer proceeds to say "there must not be allowed to be raised even the faintest whisper of any misgiving on that score.
" Paragraph 24 deserves to be reproduced : "If Sri Krishna Thackersey did not lay it bare at the time of the suit that he was one of the sponsors of a contract of which the judge 's relations were the beneficiaries, it is up to the Chief Justice of the Supreme Court and the Bombay High Court including Justice Tarkunde as also the ever vigilant members of the Bar to consider all the implications of these disclosures which have distressed a common citizen like me, so that the finest traditions of our judiciary may be preserved intact.
" A petition was filed before the Bombay High Court by the State of Maharashtra pointing out that the aforesaid article contained scandalous allegations and was calculated to obstruct the administration of justice and constituted gross contempt of court.
The article purported to state certain facts relating to the transaction between Khare Tarkunde and the Bank which were false and there were several mis statements and suppression of facts some of which were: (a) The article wrongly stated that the father of Mr. Justice Tarkunde was a partner in Khare Tarkunde; and (b) The article falsely described the transaction as a 'loan ' by the Bank to Khare Tarkunde.
In fact the said transaction was only a guarantee given by the Bank which undertook to pay to the Govt.
any amount not exceeding Rs. 10 lacs in the event of Khare Tarkunde being unable to perform its obligations.
The Bank was secured by a further guarantee given by the New India Assurance Co. Ltd. undertaking to secure the Bank in the event of the Bank having to pay the said amount or any part thereof.
Appellant No. 2 who also happens to be a Director and Principal Officer of the first appellant, filed a reply raising some objec 783 tions of a legal and technical nature ,and took up the position that the impugned article was based on a report published in "Prajatantra" from which all the facts stated in the article were incorporated.
It was asserted that certain 'major facts ' had been verified by the appellant and found to be true.
It was admitted that upon reading the petition for taking contempt proceedings it was found by appellant No. 2 that there were certain incorrect statements in the article.
It was claimed that the article had been published in a bona fide belief that whatever was stated in the article in "Prajatantra" was true.
The intention was to convey to the public at large that it was incumbent on the plaintiff Thackersey and Pettigara, one of the partners of Mulla & Mulla etc.
, his attorneys to inform Justice Tarkunde that the plaintiff had voted for a resolution of the Board of Directors of the Bank of India which, without reasonable doubt, would help Khare Tarkunde in which Tarkunde happened to be a brother of the Judge.
The High Court analysed the implications of the facts stated in each paragraph of the impugned article in great detail and observed : " . . reading the article as a whole, taking care not to read into it anything more than its plain language implies and making every allowance for literary style and rhetorical flourish expressions which were often used in the arguments for the.
respondents it is impossible to avoid the conclusions that this article exceeds the bounds of fair and reasonable criticism.
In so far as it suggests that there is some sort of casual connection between the granting of the loan to M/s. Khare Tarkunde Pvt. Ltd., and the judgment of Mr. Justice Tarkunde in the Blitz Thackersey case, it clearly attempts to lower the learned judge in his judicial capacity not to mention the fact that it would also tend to shake the confidence of the lay public in the High Court and impair the due administration of justice in that Court.
In so far as there is a suggestion made be it ever so faint that Mr. Justice Tarkunde knew or must have known of the loan to his brother 's firm before he delivered the judgment in the case, the article is malicious and 'not in good faith." The High Court also examined the misstatements and inaccuracies in the impugned article and held that there was no foundation for the suggestion that Khare Tarkunde was an impecunious concern and therefore was "lucky" to get the handsome loan nor for the suggestion that either Thackersey and his co Directors in the Bank of India or Thackersey 's solicitor and his co Directors in the New India Assurance Co. went out of their way to grant accom 784 modation to Khare Tarkunde.
The High Court found no basis for the insinuation that there was any connection between the loan and the judgment in the Blitz Thackersey case or that Justice Tarkunde knew or might have Known about any loan having been granted to his brother 's firm.
No attempt was made to justify these suggestions in the return or in the argument before the High Court and all that was urged was that the words used by contestable did not give rise to the said imputations or innuendos and that the contemnor was only trying to communicate to the public at large what has been stated before.
It is needless to refer to the other points raised before and decided by the High Court because none of them has been argued before us.
In this appeal, counsel for appellant No. 2 has made some attempt to establish that no aspersion was cast on the integrity of Justice Tarkunde in the article nor was any imputation of dishonesty made.
His second contention is that proceedings for contempt for scandalising a Judge have become obsolete and the proper remedy in such a situation is for the Judge to institute action for libel.
Thirdly, it is said that there was no evidence before the High Court that Justice Tarkunde did not know about the transaction or the dealings between the firm in which his brother was a partner and the bank of which Thackersey was a director.
If, it is submitted, the allegations made in the article were truthful or had been made bona fide in the belief that they were truthful the High Court ought not to have found appellant No. 2 guilty of contempt.
At any rate, according to counsel, the statements contained in the article only made out a charge of bias against the Judge and if such a charge is made it cannot be regarded as contempt.
On the first point our attention has been invited to the paragraphs in the article containing expression of high opinion held by the writer of the judiciary in India.
It is suggested that his attempt was only to make a fair and legitimate criticism of the proceedings in the Thackersey suit against the "Blitz" weekly.
It has been emphasised in the article that the damages which were awarded to the tune of Rs. 3 lakhs were almost punitive and that it was a rare phenomenon that the plaintiff (Thackersey) did not step into the witness box and also a permanent injunction had been granted preventing Blitz from printing anything based on the subject matter of litigation.
The law involving freedom of press fully warranted such criticism of a judgment or of the proceedings in a suit in a court of law.
It is true that the writer of the article could exercise his right of fair and reasonable criticism and the matters which have been mentioned in some of the paragraphs may not justify any proceedings being taken for contempt but the article read as a whole leaves 785 no doubt that the conclusions of the High Court were unexceptionable.
It was a skillful attempt on the part of the writer to impute dishonesty and lack of integrity to Justice Tarkunde in the matter of Thackersey Blitz suit, the imputation being indirect and mostly by innuendo that it was on account of the transaction and the dealings mentioned in the article that the suit of Thackersey was decreed in the sum of Rs. 3 lakhs which was the full amount of damages claimed by Thackersey.
It may be that the article also suggests that Thackersey and his ,attorneys were to blame inasmuch as they did not inform the Judge about the transactions of Khare Tarkunde with the Bank of India with which Thackersey was associated in his capacity as a director but that cannot detract from the obvious implications and insinuations made in various paragraphs of the article which immediately create a strong prejudicial impact on the mind of the reader about the lack of honesty, integrity and impartiality on the part of Justice Tarkunde in deciding the Thackersey Blitz suit.
On the second point counsel for appellant No. 2 has relied a great deal on certain decisions of the Privy Council and the Australian and American courts.
In the matter of a Special Reference from the Bahama Islands(1) a letter was published in a colonial newspaper containing sarcastic allusions to a refusal by the Chief Justice to accept 'a gift of pineapples.
No judgment was given by the Privy Council but their lordships made a report to Her Majesty that the impugned letter though it might have been made subject of proceedings for libel was not, in the circumstances, calculated to obstruct or interfere with the course of justice or the due administration of ,law and, therefore, did ,not constitute contempt of court.
In that case there was no question of scandalising the court nor had any imputation been made against the Chief Justice in respect of any judicial proceedings pending before him or disposed of in his court.
It is the next decision of the Privy Council in McLeod vs St.
Aubyn(2) on which a great deal of argument has been built up before us that the courts, at least in England, have stopped committing anyone for contempt for publication of scandalising matter respecting the court after adjudication as well as pending a case before it.
That case came by way of an appeal from an order of the Acting Chief Justice St. Aubyn of the Supreme Court of St. Vincent committing one McLeod to prison for 14 days for alleged contempt of court.
It was said inter alia in the impugned publication that in Mr. Trifford the public had no confidence and his locus tenons, Mr. St. Aubya was reducing the judicial character to the level of a clown.
There were several other sarcastic and libelous remarks made about the Acting Chief Justice.
While recognizing publication of scandalous matter of the court itself ,as a head of contempt of court as (1) (2) 786 laid down by Lord Hardwicke in Re: Read and Huggonson(1), Lord Morris proceeded to make the oft quoted observation "committals for contempt of Court 'by itself have become obsolete in this country even though in small colonies consisting principally of coloured population committals might be necessary in proper cases".
Only a year later Lord Russel of Killowen C.J., in The Queen vs Gray(2) reaffirmed that any act done or writing published calculated to bring a court or a judge of the court in contempt, or to lower his authority, was a contempt of court.
The learned Chief Justice made it clear that judges and courts were alike open to criticism and if reasonable argument or expostulation was offered against any judicial act as contrary to law or the public good no court could or would treat that as contempt of court but it was to be remembered that the liberty of the press was not greater and no less than the liberty of every subject.
In that case it was held that there was personal scurrilous abuse of a judge and it constituted contempt.
All the three cases which have been discussed 'above were noticed by the Privy Council in Debi Prasad Sharma & Ors.
vs The King Emperor(3) where contempt proceedings had been taken in respect of editorial comments published in a newspaper based or a news item that the Chief Justice of Allahabad High Court in his administrative capacity had issued a circular to judicial officers enjoining on them to raise contributions to the war fund and it was suggested that he had done a thing which would lower the prestige of the court in the eyes of the public.
This is what was said at page 224 : "In In re a Special Reference from the Bahama Islands , the test applied by the very strong Board which heard the reference was whether the words complained of were in the circumstances calculated to obstruct or interfere with the course of justice and the due, administration of the law.
In Reg.
vs Gray [1900] 2Q.B. 36 it was shown that the offence of scandalising the court itself was not obsolete in this country.
A very scandalous attack had been made on a judge for his judicial utterances while sitting in a criminal case on circuit, and it was with the foregoing opinions on record that Lord Russel of Killowen C.J. adopting the expression of Wilmot C.J. in his opinion in Rex vs Almon (1765) Wilmot 's Notes of Opinions 243, which is the source of much of the present law on the subject, spoke of the article complained of as calculated to lower the authority of the judge.
" It is significant that their lordships made a distinction between a case where there had been criticism of the administrative act of (1) (2) (3) 70 I.A. 216.
787 a Chief Justice and an imputation on him for having done or omitted to have done something in the administration of justice.
It is further noteworthy that the law laid down in McLeod vs St. Aubyn(1) was not followed and it was emphasised that Reg.
vs Gray(2) showed that the offence of scandalising the court itself was not obsolete in England.
In Rex vs Editor of the New Statesman(3) an article had been published in the New Statesman regarding the verdict by Mr. Justice Savory given in a libel action brought by the Editor of the "Morning Post" against Dr. Marie Slopes (the well known advocate of birth control) in which it was said, inter alia, "the serious point in this case, however, is that an individual owning to such views as those of Dr. Marie Stores cannot 'apparently hope for a fair hearing in a Court presided over by Mr. Justice Avory and there are so many Avorys".
On behalf of the contemnor McLeod vs St. A ubyn(1) was sought to be pressed into service.
The Lord Chief Justice in delivering the judgment of the Court said that the principle applicable to such cases was the one stated in Reg.
vs Gray(2) and relied on the observations of Lord Russel at p. 40.
It was observed that the article imputed unfairness and lack of impartiality to a judge in the discharge of his judicial duties.
The gravamen of the offence was that by lowering his authority it interfered with the performance of his judicial functions.
Again in Ambard vs Attorney General for Trinidad and Tobago(4) the law enunciated in Reg.
vs Gray(2) by Lord Russel of Killowen was applied and it was said at page 335: "But whether the authority and position of an individual judge, or the due administration of justice, is concerned, no wrong is committed by any member of the public who exercises the ordinary right of criticising, in good faith, in private or public, the public act done in the seat of justice.
The path of criticism is a public way; the wrong headed are permitted to err therein; provided that members of the public abstain from imputing improper motives to those taking part in the administration of justice, and are genuinely exercising a right of criticism, and not acting in malice, or attempting to impair the administration of justice, they are immune.
Justice is not a cloistered virtue; she must be allowed to suffer the scrutiny and respectful, even though spoken, comments of ordinary men.
" It was, however, held that there was no evidence upon which the court could find that the alleged contemnor had exceeded fair and temperate criticism and that he had acted with untruth or malice (1) [1899] A .C. 549.
(2) (3) (4) 788 and with the direct object of bringing the administration of justice into disrepute.
Lord Denning M.R. in Reg vs Commissioner of Police of the Metropolis, Ex parte Blackburn (No. 2)(1) made some pertinent observations about the right of every man, in Parliament or out of it, in the Press or over the broadcast, to make fair and even outspoken comment on matters of public interest.
In the words of the Master of Rolls, "those who comment can deal faithfully with all that is done in a court of justice.
They can say that we are mistaken, and our decisions erroneous, whether they are subject to appeal or not.
All we would ask is that those who criticise us will remember that, from the nature of our office, we cannot reply to their criticism.
We cannot enter into public controversy.
Still less into political controversy.
We must rely on our conduct itself to be its own vindication.
" In that case Mr. Quintin Hogg had written an article in "Punch" in which he had been critical of the Court of Appeal and had even made some erroneous statements.
But reading of the article the salient passage of which is set out in the judgment of the Master of the Rolls makes it quite clear that there was no attempt to scandalise the Court and impute any dishonourable or dishonest motives or to suggest any lack of integrity in any particular Judge.
Oswald in his book on the Contempt of Court has expressed the view that it would be going a great deal too far to say that commitments for contempt of court by scandalising the Court itself have become obsolete, and that there does not seem to be any good reason for ignoring the principles which govern the numerous early cases on the subject.
The American and the Australian cases viz., John D. Pennekamp and The Miami Herald Publishing Co. vs State of Florida(2) and Bell vs Stewart(a) to which reference h.as been made on be half of appellant No. 2 can hardly be of much assistance because in this country principles have become crystallized by the decisions of the High Courts and of this Court in which the principles followed by English Courts have been mostly adopted.
We would now advert to the decisions of this Court.
It was held in Bathina Ramakrishna Reddy vs The State of Madras(4) that the fact that the defamation of a Judge of a subordinate court constitutes an offence under section 499 of the Indian Penal Code did not oust the jurisdiction of the High Court to take cognizance of the act as a contempt of court.
In that .case in an article in a Telugu weekly it was alleged that the Stationary Sub Magistrate of Kovvur was known to the people of the locality for harassing (1) [1968].2 W.L.R. 1206.
(2) ; (3 ) (4) ; 789 litigants in various ways etc.
Mukherjea, J., (as he then was) who delivered the judgment described the article as a scurrilous attack on the integrity and honesty of a judicial officer.
It was observed that if the allegations were false, they could not undermine the confidence of the public in the administration of justice and bring the judiciary into disrepute.
The .appellant there had taken the sole responsibility regarding the publication of the article and was not in a position to substantiate by evidence any of the allegations made therein.
It was held that he could not be said to have acted bona fide, "even if good faith can be held to be a defence at all in a proceeding for contempt".
The decision in Re: The Editor, Printer and Publisher of "The Times of India" and In re Aswini Kumar Ghose and Anr.
vs Arabinda Bose & Anr.(1) is very apposite and may be.next referred to.
In a leading article in "The Times of India" on the judgment of this Court in Aswini Kumar Ghose vs Arabinda Bose & Ant.(2) the burden was that if in a singularly oblique and infelicitous manner the Supreme Court had by a majority decision tolled the knell of the much maligned dual system prevailing in the Calcutta and Bombay High Courts by holding that the right to practise in any High Court conferred on advocates of the Supreme Court had made the rules in force in those High Courts requiring advocates appearing on the original side to be instructed by attorneys inapplicable to them.
This is what was said by Mahajan, J., (as he then was) speaking for the Court: "No objection could have been taken to the article had it merely preached to the courts of law the sermon of divine detachment.
But when it proceeded to attribute improper motives to the Judges, it not only transgressed the limits of fair and bona fide criticism but had a clear tendency 'to affect the dignity and prestige of this Court.
The article in question was thus a gross contempt of court.
It is obvious that if an impression is created in the minds of the public that the judges in the highest Court in the land act on extraneous considerations in deciding cases, the confidence of the whole community in the administration of justice is bound to be undermined and no greater mischief than that can possibly be imagined." The Editor, Printer and Publisher of the newspaper tendered an apology which was accepted; but this Court concurred in the expression of views in Ambard vs Attorney General of Trinidad(3), a passage from which has already been extracted.
The guiding principles to be followed by courts in contempt proceedings were enunciated in Brahma Prakash Sharma & Ors.
vs The State of (1) ; (2) ; (3) 790 Uttar Pradesh(1).
The judgment again was delivered by Mukherjea, J., (as he then was) and the English decisions including those of the Privy Council were discussed.
It is necessary to refer only to the principles laid down for cases of the present kind i.e. scandalising the court.
It has been observed that there are two primary considerations which should weigh with the court when it is called upon to exercise summary power in cases of contempt committed by "scandalising" the court itself.
In the first place, the reflection on the conduct or character of a Judge in reference to the discharge of his judicial duties would not be contempt, if such reflection is made in the exercise of the right of fair and reasonable criticism which every citizen possesses in respect of public acts done in the seat of justice.
Secondly, when .attacks or comments are made on a Judge or Judges disparaging in character and derogatory to their dignity, care should be taken to distinguish between what is a libel on a judge and what really amounts to contempt of court.
If, however, the publication of the disparaging statement is calculated to interfere with the due course of justice or proper administration of law by such court, it can be punished summarily as contempt.
"it will be 'an injury to the public if it tends to create an apprehension in the minds of the people regarding the integrity, ability or fairness of the judge or to deter actual and prospective litigants from placing complete reliance upon the court 's administration of justice, or if it is likely to cause embarrassment in the mind of the judge himself in the discharge of his judicial duties.
It is well established that it is not necessary to prove affirmatively that there has been an actual interference with the administration of justice by reason of such defamatory statement; it is enough if it is likely, or tends is ,any way, to interfere with the proper administration of law.
" In that case it was held that the contempt was of a technical nature.
This was based apparently on the reason that the Members of the Bar who had passed a resolution attributing incompetency, lack of courtesy etc.
and had referred to complaints against two officers, one a Judicial Magistrate and the other a Revenue Officer and had sent those complaints to the District Magistrate, Commissioner and the Chief Secretary in the State and secondly because very little publicity had been given to the statement.
In Re: Hira Lal Dixit & two Ors.(2) the above principles were ,applied and reaffirmed.
In that case words which had been used in a poster which was published had the necessary implication that the judges who decided in favour of the Government were rewarded by the Government with appointments to this Court.
Although this case was not one of scandalizing of the court but the question that was posed was whether the offending passage was of such character and import or made in such circum (1) (2) ; 791 stances as would tend to hinder or obstruct or interfere with the due course of administration of justice by this Court and it was answered in the affirmative and the contemnor was held guilty of Contempt of Court.
In State of Madhya Pradesh vs Revashankar(1) an application was made under section 528 of the Code of Criminal Procedure in certain criminal proceedings containing serious aspersions against a Magistrate, Mr. N.K. Acharya.
Reliance was once again placed on Brahm Prakash Sharma 's(2) case and the principles laid therein.
It was held that the aspersions which had been made amounted to something more than a mere intentional personal insult to the Magistrate; they scandalised the court itself and impaired the administration of justice and that proceedings under the contempt of court could 'be taken against the contemnor.
There can be no manner of doubt that in this country the principles which should govern cases of the present kind are now fully settled by the previous decisions of this Court.
we may re; state the result of the discussion of the above cases on this head of contempt which is by no means exhaustive.
(1 ) It will not be right to say that committals for contempt for scandalizing the court have become obsolete.
(2) The summary jurisdiction by way of contempt must be exercised with great care and caution and only when its exercise is necessary for the proper administration of law and justice.
(3) It is open to anyone to express fair, reasonable and legitimate criticism of any act or conduct of a judge in his judicial capacity or even to make a proper and fair comment on any decision given by him because "justice is not a cloistered virtue and she must be allowed to suffer the scrutiny and respectful, even though outspoken, comments of ordinary men".
(4) A distinction must be made between .a mere libel or defamation of a judge and what amounts to a contempt of the court.
The test in each case would be whether the impugned publication is a mere defamatory attack on the judge or whether it is calculated to interfere with the due course of justice or the proper administration of law by his court.
It is only in the latter case that it wilt be punishable as Contempt.
(1) (2) 792 (5 ) Alternatively the test will be whether the wrong is done to the judge personally or it is done to the public.
To borrow from the language of Mukherjea, J. (as he then was) (Brahma Prakash Sharma 's case)(1) the publication of a disparaging statement will be an injury to the public if it tends to create an apprehension in the minds of the people regarding the integrity, ability or fairness of the judge or to deter actual and prospective litigants from placing complete reliance upon the court 's administration of justice or if it is likely to cause embarrassment in the mind of the judge himself in the discharge of his judicial duties.
As regards the third contention no attempt was made before the High Court to substantiate that the facts stated in the article were true or were rounded on correct data.
It may be that truthfulness or factual correctness is a good defence in an action for libel, but in the law of contempt there are hardly any English or Indian cases in which such defence has been recognized.
It is true that in the case of Bathina Ramakrishna Reddy(2) there was some discussion about the bona fides of the person responsible for the publication but that was apparently done to dispose of the contention which had been raised on the point.
It is quite clear that the submission made was considered on the assumption that good faith can be held to be a defence in a proceeding for contempt.
The words "even if good faith can be held to be a defence at all in a proceeding for contempt" show that this Court did not lay down affirmatively that good faith can be set up as a defence in contempt proceedings.
At any rate, this point is merely of academic interest because no attempt was made before the High Court to establish the truthfulness of the facts stated in the article.
On the other hand, it was established that some of the material allegations were altogether wrong and incorrect.
Lastly the submission that the statements contained in the article made out only a charge of bias against the judge and this cannot constitute contempt has to be stated to be rejected.
It is a new point and was never raised before the High Court.
Moreover the suggestion that the charge in the article was of legal bias which meant that Justice Tarkunde had some sort of pecuniary interest in Khare Tarkunde which had the transactions with the bank of which Thackersey was a Director is wholly baseless.
Counsel had to agree that Justice Tarkunde was neither a shareholder nor was there anything to show that he had any other interest m Khare Tarkunde.
The mere fact that his brother happens (1) (2) ; , 793 to have a holding in it cannot per se establish that Justice Tarkunde would also have some financial or pecuniary interest therein.
It is not possible to accept nor has such extreme position been taken by the counsel for appellant No. 2 that there is any bar to a brother or 'a near relation of a judge from carrying on any business, profession or avocation.
The entire argument on this point is wholly without substance.
The appellant No. 2 showed no contrition in the matter of publication of the impugned article.
lie never even tendered an unqualified apology.
The High Court, in these circumstances, was fully justified in punishing him for contempt of court and in awarding the sentence which was imposed.
In the impugned article there was a clear imputation of impropriety, lack of integrity and oblique motives to Justice Tarkunde in the matter of deciding the Thackersey Blitz suit which, on the principles already stated, undoubtedly constituted contempt of court.
The appeal fails and is hereby dismissed.
V.P.S. Appeal dismissed.

dataset_name: IN-Abs

summary:
One T filed a suit claiming Rs. 3 lacs damages for libel against a newspaper.
The suit was decreed by a Judge of the Bombay High Court.
Thereafter, an article was published in a publication brought out by the first appellant and of which the second appellant was the editor, printer and publisher.
The article contained insinuations that there was a connection between a loan of Rs. 10 lacs, granted to a firm in which the Judge 's brother was a partner, and the judgment m the defamation case; and that the Judge knew, about the loan having been granted to the firm.
The appellants were found guilty of contempt of court.
In appeal to this Court, it was contended that: (1) In the article no aspersion was cast on the integrity of the Judge nor was any imputation of dishonesty made; (2) Proceedings for contempt for scandallzing a Judge have become obsolete, the proper remedy being for the/judge to take action for libel; (3) The allegations were made in the bona fide belief that they were truthful and there was no evidence that the Judge did not know about the transaction; and (4) The statements, if at all, amounted to a charge of bias against the Judge and could not be regarded as contempt.
HELD: (1 ) The obvious implications and institutions made in the various paragraphs of the article, read as a whole, create a strong judicial impact on the mind of the reader about the Jack of honesty, integrity and impartiality on the part of the Judge in deciding the defamation suit.
[785 C D] It is open to anyone to express fair, reasonable and legitimate criticism of any act or conduct of a Judge in his judicial capacity or even to make a proper and fair comment on any decision given by him.
But, if an article attributes improper motives to the Judge, it not only transgresses the limits of fair and bona fide criticism but has a clear tendency to affect the dignity and prestige of the court and would amount to contempt of court.
[785 A, 791 F] (2) It will not be right to say that committals for contempt of court for scandalizing the court have become obsolete.
[791 D] (a) But such summary jurisdiction by way of contempt must be exercised with great care and caution and only when its exercise is necessary for the proper administration of law and justice.
[791 E] (b) There is a distinction between a mere libel or defamation of a judge and what amounts to contempt of court.
The tests are: (i) Is the impugned publication a mere defamatory attack.
on the Judge or is it calculated to interfere with the due course of Justice or the proper administration of law by his court? and (ii) Is the wrong done to the Judge personally or is it done to the public? The publication of a disparaging 780 statement will be an injury to the public if it tends to create an apprehension in the minds of the people regarding the integrity, ability or fairness of the Judge or to deter actual and prospective litigants from placing complete reliance upon the courts administration of justice, or if it is likely to cause embarrassment in the mind of the Judge himself in the discharge of his judicial duties.
[791 G H; 792 A C] B.R. Reddy vs State of Madras, ; , Re: The Editor.
Printer and Publisher of the 'Times of India ' and in re: Aswini Kumar Ghose vs Arabinda Bose, ; , Brahm Prakash Sharma vs State of U.P., ; Re: Hira Lal Dixit & Ors. ; and State of M.P. vs Revashankar , followed.
Re: Read and Huggonson, 2 Atk. 471, In the matter of a Special Reference from the Bahama Islands , McLeod vs St. Aubyn, , Reg.
vs Gray, ; Rex vs Editor of the New Statesman ; Ambard vs Attorney General for Trinidad and Tobago, (.1936) A.C. 322, Debi Prasad Sarma .v.
The 'King Emperor.
70 I.A. 216 and Reg.
vs Commissioner of Police the Metropolis, Ex parte Blackburn, , referred to.
(3) Assuming good faith can be held to be a defence in a proceeding for contempt, in the present case, no attempt was made to substantiate 'that the facts stated in the article were true or were rounded on correct data.
On the other hand, it was established that some of the material allegations were altogether wrong and incorrect.
[792 E F] B.R. Reddy 's case; , , referred to.
(4) The mere fact that his brother happened to have a pecuniary interest in the firm could not per se establish that the Judge would also have a financial interest therein so as to constitute legal bias.
[792 H; 793 A]