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Civil Appeal No. 37 of 1964, decided on 10th February 1966.

(On appeal from the Award of the Industrial Court, West 'Pakistan, Lahore, dated the 10th April 1962, in Industrial Dispute Application No. 14 of 1961).

S. 12 Award‑Demand relating to setting up of a "co‑operative store " Rejected, but Court directing supply to workers of wheat "at subsidized rates"‑Two reliefs "entirely different"‑Award, held, not sustainable.

S. 12‑Award extending Provident Fund Scheme to non‑monthly‑paid workers Extension, of a permanent obligation, involved in such scheme, to a fluctuating body of workers not approved‑Award set aside [Industrial and Commercial Employment (Standing Orders) Ordinance (III of 1960), S. O. 12]‑Rational basis of differentiation exists between monthly paid workers and others.

Scheme Award, held, "arbitrary", where employer's balance‑sheets did not show "inordinately large profits"‑[Quetta Electric Supply Co. Workers' Union v. The Quetta Electric Supply Co. .1961 P L C 1247 ref.].

for all categories of workers, viz., weekly paid, daily paid, piece‑rate and casual‑Logical basis for differentiation between such workers and monthly paid workers‑Award extending such facilities to such workers, held, "wholly irrational" and "based on no principle at all".

S. 10 ---Functions of Industrial Court‑Court a functionary exercising judicial powers" though not confined strictly within limits of Civil Procedure Code (V of 1908) or Evidence Act (l of 1872) Duty to adjudicate between rights and liabilities in "judicious manner" after applying its mind to relevant material brought on record and law applicable‑Court cannot on "mere conjecture and its own peculiar ideas of social justice"‑[Vide Dalmia Cement Ltd. v. Dalmi a' Cement Factory Workers' Union and others P L D 1958 S C (Pak.) 153; Sui Gas Transmission Co. Ltd. v. The Islamic Republic of Pakistan and others P L D 1959 S C (Pak.) 66 and Muhammad Jamil v. Chairman, Industrial Court, West Pakistan P L D 1964 S C 359 ref.]

Bashir Ahmad Senior Advocate, Supreme Court (Ihsanul Haq Advocate, Supreme Court with him) instructed by Amjad Hussain, Senior Attorney for Appellant.

Respondents Nos. 1 and 2 Ex parte.

Ahmad Said Kirmani Advocate, Supreme Court instructed by Md. Mehdi Anwar Attorney for Juris Consults, Attorneys for Respondent No. 3.

Date of hearing: 10^th February 1966.

‑This appeal by the Bannu Woollen Mills has been filed with the special leave of this Court against an award of the Industrial Court, Lahore, published in the Gazette Extraordinary of the Government of West Pakistan,, on the 2nd of May 1962.

The petition was filed in this Court on the 5th of June 1962, three days before the Constitution of the Islamic Republic of Pakistan came into force, and leave was granted on the 17th of December 1962, to consider the validity of the award only with respect to Demands Nos. 2, 3, 4 and 8.

The appellant‑mill was at the relevant time one of the projects of the Pakistan Industrial Development Corporation which was set up in the year 1953 at Bannu. In, the year 1961 disputes arose between it and its workers which led to the service of a strike notice by its registered Workers' Union on the 10th of April 1961. As the concern was a public utility service, conciliation proceedings were started. These failed on the 17th of April 1961, and disputes relating to some 22 demands were then brought before the Industrial Court under section 5(5) of the Industrial Disputes Ordinance, 1959, for adjudication. We are now concerned only with the four demands mentioned above.

Demand No. 2 was to the following effect "Co‑operative stores should be set up for the supply of daily necessities of life at cheaper rates."

The Industrial Court took the view that this demand was not only a novel demand but had also been worded in an extremely vague and indefinite manner and, as such, it would be "quite impracticable" to order the Mill to start co‑operative stores. The Industrial Court was also of the view that there was no provision of law under which it could so order, but whilst rejecting this demand it went on to order that, nevertheless, the "mill should provide for its workers wheat at a subsidized rate". The only grounds given for making this order are that there is "a consistency in this country with regard to the supply of wheat at subsidized rates", and that "this is done by all the industrial concerns."

It is contended on behalf of the appellant‑mill that the award on this demand is without jurisdiction, for, this was clearly not what the workers had demanded nor had this question ever formed the subject‑matter of any conciliation proceeding. According to the appellant‑mill under section 10 of the Industrial Disputes Ordinance, 1959, the only jurisdiction that the Industrial Court has is to "adjudicate and determine any industrial dispute in respect of which an application has been made to it under subsection (5) of section 5"' and under the said subsection the application can only be made by a party to whom a certificate of the failure of the conciliation proceedings has been issued. In the present case no dispute of this nature was raised before the conciliation officer nor was this question even adverted to in the application under the said subsection. Therefore, the Industrial Court had no jurisdiction to adjudicate upon or determine a dispute, which was neither raised before the Conciliation Officer nor before the Court itself.

Learned counsel appearing for the respondent‑union, on the other hand, contends that this is not a case of exceeding jurisdic tion, for, the question was involved in the demand which substantially wanted "supply of daily necessities of life on cheaper rates" and the Industrial Court had merely awarded the supply of only one item of such daily necessity of life on cheaper rates. In other words, the Court had awarded only a part of the demand which it undoubtedly had jurisdiction to do.

We are, however, unable to agree that the Industrial Court had granted only a part of the relief claimed. The setting up of a co‑operative store and the supply of wheat at subsidizes rates are entirely different reliefs. A co‑operative store is set in as a co‑operative venture by an association of persons who become share‑holders in it. They contribute towards its capital and if the venture turns out to be successful and shows a profit, they also share in the profits. A co‑operative store does not supply goods at subsidized rates. The object of such a store is mainly to sell goods to its co‑operators or share‑holders at no profits or on al marginal profit but as a commercial venture. On the other hands in a scheme for the supply of goods at subsidized rates the supplier undertakes to make good the difference between the; market rate and the subsidized rates out of his own pocket in effect, therefore, under a scheme for the supply of goods at a subsidized rate the employer would, of necessity, have to bear the burden of making up this deficiency, whereas under a co operative store scheme the employer need not, apart from providing physical facilities for the housing of such a store, be called upon to make any contribution at all to the venture. It cannot wit h any reason, therefore, be maintained that the quest ion of supplying wheat at subsidized rates is involved in the demand for the setting up of a co‑operative store. They were entirely dissimilar in nature and were, in no way, inter‑related. We are therefore, clearly of the view that the award of the Industries a Court on this demand was without jurisdiction and that it was, also based on no material at all. The assertion of the Industrial Court that "this is done by all industrial concern" is not supported by any evidence on the record, nor has the learned counsel appearing for the respondent‑union been able to cite any such, instance before us. All that he has been able to say is that there is no bar to this industry being the first to do so. Even this be so, a proper foundation should have been laid for it by raising a demand in that specific form and substantiating it by cogent evidence not only the need for it but also the capacity of the industry concerned to bear the burden. Nothing of the king was done. The Industrial Court had, in our opinion, clearly misconceived the scope of its functions and acted purely upon its own whim and fancy in making the said award. The award on this demand cannot, therefore, be sustained.

The Demand No. 3 required that a "Provident Fund Scheme should be introduced among the workers of the factory and it should be paid at double the rate after three years' service", and Demand No. 4 wanted that.

"Gratuity on the basis of five months pay after three years should be paid to the workers in case of retirement, dismissal, discharge, pension or death."

The Industrial Court dealt with both these demands together and allowed them both, not only for monthly‑paid workers but also for daily‑paid and piece‑rate workers.

The appellant, it appears, had before the Industrial Court accepted the demand for the introduction of a Provident Fund Scheme for its monthly‑paid workers but had opposed the demand for the payment of gratuity in view of the introduction of along term scheme of provident fund. The Industrial Court, however, took the view that there was no reason to make a distinction between monthly‑paid workers and daily‑paid or piece‑rate workers and ordered that the Provident Fund Scheme proposed to be introduced for monthly‑paid workers should also be extended to other categories of workers. It totally overlooked that the demand for payment of gratuity even to monthly‑paid workers was being opposed on the ground that the imposition of a gratuity scheme on top of the Provident Fund Scheme would be financially unsound and that it had actually been so held by the same Industrial Court itself in the case of the Quetta Electric Supply Co. Workers' Union v. The Quetta Electric Supply Co. (1) in 1961.

The appellant contends that the extension of the Provident Fund Scheme to daily‑paid and piece‑rate workers is not only impracticable but also opposed to the scheme of the labour laws. There is, it is said, no precedent also for such extension of a Provident Fund Scheme to these categories of workers.

It may be mentioned here that out of the total number of about 610 workers employed by the appellant‑mill only about 160 are on the monthly paid basis and the rest of them are paid on the daily wage or piece‑rate basis.

The appellant further contends that it will not be feasible to introduce a Provident Fund Scheme for such a fluctuating body of employees, for, obligations of a permanent character cannot be extended to this type of workers. Learned counsel appearing for the respondent‑union, however, contends that there can be no logical basis for making any distinction between monthly‑paid workers and the other type of workers, particularly, since in the Mill in question most of these daily‑paid and piece‑rate workers are employed without a break throughout the year. There is some evidence to this effect on the record. The Manager of the Mill (R. W. 4) admitted that some "daily‑paid workers are also permanent" and that it had 450 permanent workers who are paid fortnightly. The learned counsel for the respondent Union has, however, not been able to refer to the case of any other industry in which a Provident Fund Scheme has been extended to such categories of workers.

The main purpose of a Provident Fund Scheme is to make provision for giving benefits to workmen on retirement after long service. It is also an encouragement towards compulsory saving on the part of the employees, but the nature of the fund itself is such that it cannot be introduced for a purely fluctuating body. Some kind of permanency in employment is necessary, for invariably the employers' contribution is not payable unless the employee has put in a certain minimum period of service. Such schemes also involve intricate actuarial calculations. It is in most cases an alternative for a pension scheme, although both may be provided for together. Its administration is governed by the Provident Funds Act, 1952.

Apart from this, it appears from the Industrial and Commercial Standing Orders Ordinance, 1960, that workers have been classi fied into permanent, probationers, Badlis, temporary, casual and apprentices. There is no separate classification for daily‑paid or piece‑rate workers. They may, therefore, come under any of the categories mentioned in the Ordinance. If they are purely "temporary" or "casual" workers, then to them different rules are made applicable. Their services are liable to be terminated without notice or pay in lieu thereof, except where the termination is as a result of punishment. In the case of permanent workmen, on the other hand, Standing Order No. 12 requires that one month's notice must be given to monthly‑paid worker and two weeks' notice to permanent workmen paid otherwise. There can also be no leave rules for purely casual workers nor can benefits of any permanent character be extended to a fluctuating body of workers. We are in agreement, therefore, with the learned counsel for the appellant that a rational basis for differentiation did exist and the Industrial Court had no justification at all for presuming that there was no logical reason for making an distinction. As we have indicated above a number of relevant circumstances had to be taken into consideration before making such a wide extension of an obligation of a permanent nature or making any rash generalization. The Industrial Court did not take any of these factors into consideration. The extension of the Provident Fund Scheme to non‑monthly‑paid workers was made without proper application of the mind of the Court either to the nature of the relief claimed or the principles governing such a scheme or the financial implications thereof. This award, there fore, must also be set aside to the extent it has been made appli cable to non‑monthly paid workers.

The possibility of the Provident Fund Scheme being extended to at least all permanent workers, whether paid on the monthly basis or not, has not been seriously pressed before us nor is there any material on tire record from which its exact financial implication can be ascertained. We do not propose, therefore, to express any opinion on this aspect of the matter.

As regards the gratuity it appears that the Industrial Court was under a misapprehension that the appellant had admitted that a scheme for payment of gratuity was also in contemplation for monthly‑paid workers. A reference to the written statement of the appellant would have made it clear that the appellant did not consider it necessary to have a gratuity scheme in addition to the Provident Fund Scheme. It is contended on behalf of the appellant that the financial position of the appellant was not such that it could reasonably be expected to bear this additional burden. The Industrial Court has, given no reasons for allowing the demand in respect of the gratuity as well, although the balance sheets of the appellant were filed before the Court. They disclose that for the year 1957 the profit was only Rs. 5,899‑8‑5, in the year ending 31st March 1958, the Mill incurred a loss of Rs. 1,12,823‑3‑10, in the year ending 30th June 1959, the profit was only Rs. 2,22,398‑13‑8 and for the year ending 30th June 1960, the profit was Rs. 5,94,430‑14‑1. The balance‑sheets do not, therefore, disclose such inordinately large profits as would warrant the imposition of the payment of gratuity over and above the Provident Fund contributions.

The Industrial Court has also not said why it has made a distinction between the case of the present appellant and the Quetta Electric Supply Company where the demand for a gratuity in addition to the provident fund was not allowed by it in 1961. We are, therefore, of the view that the award on this demand also r is arbitrary and not made after proper consideration of the evidence or the judicious application of the mind of the Industrial Court to the relevant facts and circumstances.

The last demand, in respect of which the award is challenged, is‑

"Demand No. 8.‑Full‑fledged hospital should be provided inside the factory with qualified doctor and a nurse. Arrange ments for the residence of the indoor patients be made."

In this case too the appellant in its written statement disclosed that the Mill was already maintaining a dispensary with a qualified compounder and a qualified doctor, although the latter only attended on alternate days. The dispensary, according to the evidence of the workers themselves, gives first‑aid service sand other medical attention to all kinds of staff, whether monthly paid, daily‑paid or piece‑rate workers, without any distinction. It also admittedly supplies mixtures and preventive medicines free of charge not only to all categories of workers but also to their family members. In case of accidents also full hospital facilities are provided, free of charge, to all workers who are treated as on duty during the period of such hospitalization.

In August 1956, however, the Pakistan Industrial Development Corporation had issued instructions to all its concerns for the supply of further medical facilities to the employees of the corporation, "other than casual workers and those engaged on daily or weekly wage basis". These facilities were of an extensive nature and included free medical assistance, re‑imbursements of cost of medicines not supplied by the dispensary, cost of hospitali zation and even costs of confinement and other maternity benefits not only for such workers but also for the members of their families.

The Industrial Court again, without giving any reasons, thought that these extensive facilities should also be provide to casual, daily‑paid and weekly‑paid workers, even though it was not disposed to order the mill to set up a full‑fledged hospital or even engage a full‑time doctor for its dispensary. This extension was also ordered on the ground that there was no logic behind the discrimination made between monthly‑paid workers and other categories of workers. No other reason was given nor was it considered as to whether the financial condition of the appellant justified the extension of such facilities.

The appellant again contends that this demand is wholly unreasonable, arbitrary and based upon no consideration of either the needs of the workers or the capacity of the appellant to provide the same.

We have already given our reasons for holding that the Industrial Court was wrong in taking the view that there was no logical basis for making a differentiation between monthly‑paid and other categories of workers. ‑It is unnecessary to repeat them here, for, what has been said in this connection earlier applies with greater force in this case. It is inconceivable how, such extensive medical facilities can reasonably be expected to be extended to casual workers. The result of such extension may well be to saddle the appellant with the liability of providing all these medical facilities to a worker and his family, even though he may have worked for only a week or less in a year on a daily wage or at piece‑rate basis. We are, therefore, unable to appreciate how the Industrial Court could come to the conclusion that there was no difference between the various categories workers. The award on this demand is also, in our view, wholly irrational and based on no principle at all.

An Industrial Court, though not confined strictly within the limits of the Code of Civil Procedure or the Evidence Act, is nevertheless "a functionary exercising judicial powers" and as has E been observed in more than one case by this Court it is charged with the duty of adjudicating upon rights and liabilities in judicious manner after applying its mind to all "relevant material properly brought on the record and the law applicable to the matters in dispute." It cannot act upon "mere conjecture and its own peculiar ideas of social justice" far less as a "benevolent despot". (Vide Dalmia Cement Ltd. v. Dalmia Cement Factory Workers' Union and others (P L D 1958 S C (Pak.) 153); Sui Gas Transmission Co. Ltd. v. The Islamic Republic of Pakistan and others (P L D 1959 S C (Pak.) 66) and Muhammad Jamil v. Chairman,. Industrial Court, West Pakistan (P L D 1964 S C 359). In the present case, however, we regret to find that the Industrial Court concerned acted in total disregard of these principles and, as we have indicated earlier, in a wholly whimsical and arbitrary manner.

For these reasons we are clearly of the opinion that this appeal must be and is accordingly allowed. The award of the Industrial Court in respect of Demands Nos. 2 and 4 is set aside in toto and the award in respect of Demands Nos. 3 and 8 is set aside to the extent it has been made applicable to non‑monthly paid workers. There will, however, be no order as to costs having regard to the special circumstances of this case.

A. H. Order accordingly.

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