Indian Oil Officers’ Association Vs. Indian Oil Corporation Ltd. [Calcutta High Court, 15-06-2016]

Contents

Trade Unions Act, 1926 – Section 13 – Registered Trade Union – Rights under the Trade Unions Act, 1926 cannot be waived by an Association on behalf of its members.


IN THE HIGH COURT AT CALCUTTA

Constitutional Writ Jurisdiction Appellate Side

I.P. MUKERJI, J.

Judgement On: – 15th June, 2016

W.P. No. 10016 (W) of 2015

Indian Oil Officers’ Association & Anr.
v.
Indian Oil Corporation Ltd & Ors.

For the petitioners :- Mr. Partha Sarathi Sengupta, Sr. Advocate Mr. Sagar Bandyopadhyay Mr. Soma Kar Ghosh Mr. Niladri Banaerjee…Advocates For the respondents. Mr. Anindya Kumar Mitra, Sr. Advocate Mr. Soumya Majumder Mr. Sarmistha Ghosh Mr. S. Bhattacharjee, Advocates

BACKGROUND

This is a writ by the Indian Oil Officers’ Association (the Association). It is a registered trade union, under

# Section 13 of the Trade Unions Act, 1926.

This kind of a trade union is treated as a body corporate. It can sue. It can be sued. The petitioner no. 2 is their General Secretary. The members work in various offices, depots, establishments, divisions etc. of Indian Oil Corporation. The Association challenges a Memorandum of Understanding dated 24th April, 2009. It was purportedly entered into by six members of this Association with the Corporation. They challenge certain clauses in it i.e. clauses 4,11,13,16 and

18. The agreement as a whole is also challenged. These clauses are set out below:

“4. Association shall on its own resolve and make endeavour to settle all the issues by mutual negotiation with the Management and shall not be part of any other federation/or collective forum.

11. Officers in Grade ‘G’ and above shall not be members of the Association.

13. Association will not interfere in any manner in the rights of Management concerning employment, non-employment, terms of employment and conditions of service.

16. Any officer in the position of Head of Department. Location Head irrespective of the grade shall not participate in any form of agitation.

18. Any violation of this code, reported or observed, shall render the Association to lose its status of recognition.”

They say that the management of the Corporation had obtained this agreement by subterfuge. Three of the signatories on behalf of the Association were dismissed employees. Three were suspended officers. They could not represent the Association. They had not been expressly or impliedly authorised by the Association to sign the agreement. They had been allured by the Corporation to execute it on the promise of reinstatement. They were also promised fast track promotion and their desired posting. They got it after execution of the agreement.

The agreement is attacked on the ground of unconstitutionality, illegality, arbitrariness and mala fide. It is also alleged that this agreement was obtained by duress, coercion, undue influence and so on. The Association wants a declaration that the Memorandum is unconstitutional and void. In the alternative they pray that the above clauses are not binding on their members and should not be enforced.

On the other hand, the respondents have argued that this writ has been filed after a delay of six years. In these six years the legal right of the writ petitioners to approach a Civil Court had been extinguished by the law of limitation. On the ground of delay this writ application should be dismissed. It is also said that the agreement was signed by the authorised representatives of the Union. Dismissed or suspended employees of the Corporation remained members of the Association. In that capacity they had signed the agreement. It had been signed with the eyes of the signatories wide open. Now the Association cannot come forward and challenge this agreement. The subject matter of challenge in this writ is infringement of the right of freedom guaranteed by article 19 of our Constitution. The Association being a body corporate is not conferred the right under this Article, which are only available to citizens. The terms of the Memorandum of Association have been accepted by all members of the Association by acquiescence, it was submitted. DETAILS Now, the facts have to be gone into in some detail. The agreement covers 15,000 officers who are members of the Association. They elect their office bearers every three years. The members elect their unit level representatives. These unit level representatives elect 62 All India Central Executive Committee Members (AICEC). This election process spreads all across the country. These 62 members comprising the said committee elect a core group comprising of 10 members. Decisions are taken by the core group with the required quorum. This decision has to be accepted by the Central Executive Committee. All employees of the corporation from Grade-A to I except Board level executives who are appointed by the Government of India, constitute the Officers grade. All officers are eligible to become members of the Association. Article 4(v) (a) of the Constitution of the Association provides that membership will be automatically terminated if a member ceases to be an officer of the Corporation.

The Officer’s Associations of 14 Public Sector Oil Companies had formed an Association Oil Sector Officers’ Association (OSOA). All the members of this Association (OSOA) went on strike between 7th January, 2009 and 9th January, 2009. It appears from the records that in response to this strike the management of the Corporation dismissed the President of the IOOA Mr. S. Dakwala, their Vice President Mr. M.S. Sharma and the General Secretary Mr. Tanmay Chatterjee. Some other office bearers of the Association were suspended. The Association complains that clandestinely on 24th April, 2009 the management of the corporation held a meeting at the Hotel Taj Bengal Kolkata with inter alia M/s Dakwala, Sharma and Chatterjee and three other members. It was here that they were allured to sign the said agreement on 24th April, 2009, it is alleged. The delay in filing this writ application has been sought to be explained in this way. After the 2009 strike the IOOA became virtually non-functional. Only the members of AICEC were aware of the agreement. The other members were not aware of the same till April 2011 after the election to AICEC and its reconstitution. This awareness was allegedly caused by the communication dated 5th April, 2011 by the respondent corporation to AICEC. On 29th July, 2011 AICEC convened a meeting at Kolkata rejecting the memorandum. This was communicated to the respondent corporation. They disapproved of this agreement. By their letter dated 9th August, 2011 the Corporation reiterated that they would enforce the agreement. On 25th August, 2011 IOOA requested the Corporation to reconsider their decision. It appears that the Association and the Corporation entered into correspondence between 25th August, 2011 and 18th June, 2014. On 18th June, 2014 the corporation wrote to the Association that if they acted contrary to the memorandum they would be derecognised. On 19th June, 2014 a representation was made to the Chairman of the corporation by the Association. He rejected the representation of the petitioner on 30th June, 2014.

Hence, this writ.

SUBMISSIONS

Mr. Partha Sarathi Sengupta, learned senior advocate appearing for the petitioners tried to justify the delay in filing the writ application by citing several authorities. He referred to

# Canara Bank v. Canara Sales Corporation and others reported in (1987) 2 SCC 666.

It was a bank matter. Fraud was alleged by the customer. The customer according to the findings of the Supreme Court discovered the fraud and negligence at a much later point of time. The Supreme Court held that time would start to run from the date of knowledge of the plaintiff. It rejected the plea of acquiescence set up by the bank on the ground that in the absence of knowledge this plea could not be taken by them. He also referred to

# State of Gujarat and Others v. Meghji Pethraj Shah charitable Trust and Others reported in (1994) 3 SCC 552.

That decision inter alia held that there could not be any waiver of a fundamental right by a citizen and that in this regard the plea of waiver, estoppel etc. could not be set up. Learned Counsel said that the signatories to the agreement, on dismissal from the corporation, ceased to be their officer. Hence, the agreement was void ab initio.

I will now discuss the challenge thrown to the agreement itself. Clause-13 of the memorandum of Association is in conflict of clause 3 (e) of the Constitution of the Association which provides for advancement of the common interest of the members. Clause-13 of the agreement says that the members of the Association will not interfere in any manner with the rights of the management concerning “employment, terms of employment and condition of service”. This directly infringes the right of the members of the Association to raise a trade dispute. Clause-4 of the agreement which provides that the Association shall not be a part of any other federation or collective forum interferes with and takes away the right provided in clause 3 (i) of the Constitution to interact with other similar Associations in the country. Clause- 11 of the Memorandum of Understanding takes away the right of officers in Grade-G and above to be a member of the Association and participating in its activity which is contrary to clause 4(i) of the Constitution which provides that all officers of the corporation would be members of the Association. Clause-16 of the agreement takes away the fundamental right of the head of the department/local head to take part in a peaceful demonstration or agitation.

# Kameshwar Prasad and others v. State of Bihar and anotherreported in AIR 1962 SCC 1166

was cited by Mr. Sengupta in which case rule 4 (A) of the Bihar Government Servants Conduct Rules, 1956 which debarred government servants from participating in demonstrations or strike was held to be ultra vires the Constitution. Implementation of this agreement by the respondent corporation was not only violative of Article 19 of the Constitution but was also arbitrary under Article 14 thereof, it was submitted. Mr. Anindya Kumar Mitra, learned senior advocate appearing for the corporation cited

# State of Madhya Pradesh and another v. Bhailala Bhai reported in AIR 1964 SC 1006

# M/s Tilokchand Motichand and others v. H.B. Munshi, Commissioner of Sales Tax, Bombay and another, reported in AIR 1970 SC 898

on the question of delay and acquiescence. In those cases the Supreme Court opined that a person availing of the extraordinary jurisdiction of the Supreme Court under Article 32 of the Constitution for enforcement of a fundamental right should approach the court as expeditiously as possible without any delay. There was inordinate delay on the part of the petitioner. Hence the writ ought not to be entertained on that ground. It was preferred six years after execution of the agreement and four years after the date of the alleged knowledge. Hence, it should not be entertained. Learned counsel cited

# Union of India and other v. M/s Suksha Internation and M/s Nutan Gems and another reported in AIR 1989 SC 690

where the court held that the question of delay in filing the writ application should be specifically dealt with by the court.

Mr. Mitra then showed me Clause-4 (v) (c) of the Constitution of the Association which is in the following terms.

“(c) Notwithstanding what is stated in clause 4(v) (a) above in the event of arbitrary separation of a member from the services of the Corporation, the Local Executive Committee/AICEC may continue the membership, upon receipt of written request from the member, until such time it is decided that the separation was just and fair.”

He submitted that all the officers who signed the agreement continued to be members of the Association. He referred to paragraph-8 of the affidavit-in- opposition. It is stated therein that Mr. Tanmoy Chatterjee became a member of the apex body namely All India Central Executive Committee in the year 2011 for a period of two years, being the usual tenure for such a member. Mr. M.S. Sharma became a member of the same body initially for a period of two years in 2011, then for a period of three years in 2013.

Learned counsel argued that some of the members of the Association were promoted to Grade-G. A list of such members was contained in annexure R2 to the affidavit-in-opposition. These officers who are substantial in number ceased to pay subscription to the Association after the agreement. Therefore, the members of the Association had acquiescenced in the terms and conditions of the agreement and had acted upon it. At this point of time they could not resile from that position. He relied upon a notice dated 26th November, 2009 for a meeting of the Association on 16th December, 2009. The agenda for the said meeting did not contain any item with regard to the impugned agreement. He submitted that the Association was fully aware of the agreement or deemed to have been aware of it and consciously did not challenge it. The next submission of Mr. Mitra was that under Section 13 of the Trade Union Act, 1926 a registered trade union was treated as a body corporate with perpetual succession and common seal. It had the power to acquire both movable and immovable properties and to enter into contracts. The Association was such a registered trade union. The writ was by the Association. It primarily complained of the infringement of fundamental rights by the Corporation under Article 19 of the Constitution of India. Article 19 conferred those rights on citizens only. He cited The Tata Engineering and Locomotive Co. Ltd. v. the State of Bihar and others, The Automobile Products of India and another v. Mohd. Sharfuddin Sale-tax officer, Bombay,

# The State Trading Corporation of India Ltd v. The Commercial Tax Officer and others reported in AIR 1965 SC 40

which inter alia stated that a body corporate was not a citizen and did not enjoy any fundamental right under article 19 of the Constitution of India.

Learned counsel cited

# Dharam Dutt and Ors. v. Union of India (UOI) and Ors. reported in AIR 2004 SC 1295

affirming the principles laid down in the above case. He also cited

# Chairman, State Bank of India and Anr. V. All Orissa State bank Officers Association and Anr. reported in AIR 2003 SC 4201

which ruled that the rights of a trade union and these of its members were different following the principles in the above 1965 case.

# Mahinder Kumar Gupta and others v. Union of India, Ministry of Petroleum and Natural Gas reported in (1995) 1 SCC 85

was cited to suggest that an Association had no fundamental right. This was supported by

# State of U.P. and Another v. C.O.D Chheoki Employees’ Cooperative Society Ltd. and Others reported in (1997) 3 SCC 681.

The next point urged by Mr. Mitra was that no public law element was involved in this writ application. The writ petitioner only complained of the voidness of the agreement between the Association and its alleged unconstitutionality. Substantially, the cause of action of the writ was in the domain of private law. Hence, this writ ought not to be entertained. He also submitted that this writ application was filed without the approval of the general body under clause-7 of the Constitution.

Learned counsel cited

# Dilip Singh v. The State of Uttar Pradesh and Others reported in (2010) 2 SCC 114

which laid down that no litigant should be allowed to pollute the stream of justice. The writ petitioners were guilty of suppression in as much as there was disclosure and attack of only a part of the agreement without placing the whole of it. Secondly, that the agreement had been acted upon and accepted by the Officers’ Association was also not revealed to the court. In this process the petitioners were guilty of suppression of material facts. It was said that they had abused the process of law. A writ court should not be used as a forum for resolution of contractual disputes, it was said, citing

# State of Bihar and Others v. Jain Plastics and Chemicals Ltd. reported in 2002 (1) SCC 216.

A writ Court could not be used for interpretation of a clause in the contract, Mr. Mitra submitted citing

# Kerala State Electricity Board and Another v. Kurien E. Kalathil and others reported in (2000) 6 SCC 293.

Support was also drawn from

# Har Shankar and Others v. The Dy. Excise and Taxation Commr. And Others reported in (1975) 1 SCC 737

(para 22).

Any action on behalf of a statutory body curtailing the right of persons to join the Association is violative of Article 19 (1) ( c ) and 19 (4) of the Constitution of India, it was submitted by Mr. Sengupta in reply, citing Smt. Damayanti Naranga v. The Union of India and others (W.P. No. 91 of 1994) and the

# Hindi Sahitya Sammelan and others v. Shri Jagdish Swarup and others reported in AIR 1971 SCC 966.

( Civil Appeal No. 358 of 1966)

The stipulation in the agreement that certain categories of officers could not join or could not make any peaceful demonstration was against the Constitution and the Trade Unions Act, 1926. Learned counsel distinguished The Tata Engineering and Locomotive Co. Ltd. v. the State of Bihar and others, The Automobile Products of India and another v. Mohd. Sharfuddin Sale-tax officer, Bombay,

# The State Trading Corporation of India Ltd v. The Commercial Tax Officer and others reported in AIR 1965 SC 40

by citing

# Delhi Cloth & General Mills Co. Ltd. V. Union of India and Others reported in (1983) 4 SCC 166

which inter alia laid down in paragraph 12 that the rights by shareholders and the company which the shareholders had formed “are co-extensive and the denial to one of the fundamental freedom to one would amount to denial to the other.” A writ application could be filed by a company under Article 226 of the constitution of India for any other purpose including violation of Article 14 of the Constitution of India, or violation of law, Mr. Sengupta argued.

MY CONCLUSIONS

The Memorandum of Understanding was entered into on 24th April, 2009 between the management of the Corporation and the Association represented by six office bearers. The Association is a body corporate under Section 13 of the Trade Unions Act, 1926. It is a juristic entity. It has its own identity, common seal and perpetual succession. It is alleged that the signatories of this memorandum of Association did not have the authority, according to their Constitution to sign it, by virtue of their dismissal or suspension. When a question is raised with regard to the authority of certain office bearers of a body corporate to sign an agreement, it is in the domain of private law. No public law element is involved. The proper course for the writ petitioners was to challenge the formation of the agreement. If the persons signing the agreement had no authority, then the agreement could be termed as void and nonest. This dispute in the private law field should not be entertained by this court in the exercise of its writ jurisdiction.

Furthermore, this court in the exercise of its writ jurisdiction should never be invited to adjudicate upon disputed questions of facts. Whether the agreement is void or voidable on the above ground can only be decided by a proper court upon admission and consideration of substantial evidence. Therefore, this court will proceed on the basis that there was an ostensible agreement between the Association and the management.

Now, I come to the point raised of Indian Oil Corporation that this writ seeks enforcement of fundamental rights of the petitioner Association under Article 19 of the Constitution of India. A company or a body corporate cannot be called a citizen under Article 19 of the Constitution of India. Hence, a company cannot maintain an application for enforcement of a fundamental right guaranteed by Article 19 of the Constitution of India. Applying that analogy, the writ petitioner Association, being a body corporate cannot enforce those rights as held by the Supreme Court in The Tata Engineering and Locomotive Co. Ltd. v. the State of Bihar and others, The Automobile Products of India and another v. Mohd. Sharfuddin Sale-tax officer, Bombay,

# The State Trading Corporation of India Ltd v. The Commercial Tax Officer and others reported in AIR 1965 SC 40

and affirmed in

# Mahinder Kumar Gupta and others v. Union of India, Ministry of Petroleum and Natural Gas reported in (1995) 1 SCC 85

and

# State of U.P. and Another v. C.O.D Chheoki Employees’ Cooperative Society Ltd. and Others reported in (1997) 3 SCC 681.

Applying the principles of law laid down in these cases, an Association or trade union is separate from its members and cannot espouse the cause of its members by filing a writ application. However, other decisions of the Supreme Court cited by Mr. Sengupta on reply Smt. Damayanti Naranga v. The Union of India and others (W.P. No. 91 of 1994) and the

# Hindi Sahitya Sammelan and others v. Shri Jagdish Swarup and others reported in AIR 1971 SCC 966,

( Civil Appeal No. 358 of 1966) and

# Delhi Cloth & General Mills Co. Ltd. V. Union of India and Others reported in (1983) 4 SCC 166

clearly indicate a change in thinking of the Supreme Court post The Tata Engineering and Locomotive Co. Ltd. v. the State of Bihar and others, The Automobile Products of India and another v. Mohd. Sharfuddin Sale-tax officer, Bombay, The State Trading Corporation of India Ltd v. The Commercial Tax Officer and others reported in AIR 1965 SC 40. Smt. Damayanti Naranga v. The Union of India and others (W.P. No. 91 of 1994) and the Hindi Sahitya Sammelan and others v. Shri Jagdish Swarup and others ( Civil Appeal No. 358 of 1966) reported in AIR 1971 SCC 966recognises the right to form and run an Association as a fundamental right

# Kameshwar Prasad and others v. State of Bihar and another reported in AIR 1962 SC 1166

very plainly tells us that any obstruction caused to exercise the right to form or join an Association is violative of our Constitution. More importantly

# Delhi Cloth & General Mills Co. Ltd. V. Union of India and Others reported in (1983) 4 SCC 166

has identified certain actions which may affect a body corporate as well as its shareholders or members.

There may be a cause of action which is common to a body corporate as well as its shareholders or members or a cause of action that affects both of them. Often these rights are “co-extensive as held in the 1983 case. In those circumstances the body corporate or a registered trade union or its members can maintain a writ application. Furthermore, this decision says that a body corporate may not only sue or be sued for violation of Article 19 but it may also sue for violation of Article 14 or any other law.

Furthermore, take a look at a Section 15 (d) of the Trade Unions Act, 1926. A Trade Union can expend funds for the conduct of trade disputes on behalf of the Trade Union or any member thereof. It is quite plain from this provision that the union can espouse the cause of its members. It is obvious that the impugned clauses in the agreement very seriously affect the rights of the Association, as a union as well as all its members. Therefore, following the principles in

# Delhi Cloth & General Mills Co. Ltd. V. Union of India and Others reported in (1983) 4 SCC 166

the Association has a clear right to maintain this writ application on behalf of its members. This writ, apart from challenging the formation of the agreement, attacks certain clauses therein, namely 4, 11,13,16 and 18. The writ petitioners attack these clauses on the ground that they are violative ofArticle 19 of the Constitution of India, and are thus, void and arbitrary. In my opinion, in the exercise of its writ jurisdiction, this court is competent to adjudge whether certain clauses of an agreement violate the Constitution or the laws. To this extent, public law is involved. Where breach of public law is complained of, this court can intervene. It does not matter whether this public law element arises out of an ordinary contract between two parties. Furthermore, parties cannot contract so as to take away the fundamental or other legal rights of another party, applying the ratio in

# Kameshwar Prasad and others v. State of Bihar and another reported in AIR 1962 SC 1166

# State of Gujarat and Others v. Meghji Pethraj Shah charitable Trust and Others reported in (1994) 3 SCC 552.

Those parts of the agreement would be void an initio.

The impugned clauses of the agreement 4,11,13,16 and 18 tend to unreasonably restrict the fundamental rights of free association, demonstration, expression of speech, opinion etc.. granted by Article-19 of the Constitution and the rights conferred on the members of the Association by the Trade Unions Act, 1926. Hence, those clauses are illegal and void ab initio. They cannot be applied against the members of the Association. If an agreement or any clause in it is against the constitution or the laws it is illegal. If a clause or clauses in the agreement are so tainted with illegality but the rest of the agreement can survive, it is a well-known principle of law that the court has the power to sever those parts, using the “blue pencil test”. Now, if the whole agreement or a part of it is illegal, under the ordinary law, the whole or a part of it, as the case may be is void ab initio. If it is void ab initio it never came into being. It never existed at any point of time. Void ab initio is defined by Black’s Law Dictionary in the following manner: “void ab initio-null from the beginning, as from the first moment when a contract is conferred into. A contract is void ab initio if it seriously offends law or public policy, in contrast to a contract that is merely voidable at the election of one party to the contract. A vacuum or something non- existent can never give rise to any cause of action. Therefore, the contention, invoking the Limitation Act, 1963 is misplaced. Of course, I would add that if a further remedy arising out of voidness is sought, e.g. return of money, delivery back of property etc, then those reliefs have to be claimed within the period of limitation, as provided by law. Enforcement of an illegal agreement can be resisted by a party to it at any point of time.

# State of Madhya Pradesh and another v. Bhailala Bhai reported in AIR 1964 SC 1006

# M/s Tilokchand Motichand and others v. H.B. Munshi, Commissioner of Sales Tax, Bombay and another, reported in AIR 1970 SC 898

have no manner of application to the facts of the case.

Hence, in my opinion, this writ application is not barred by delay. No authority is needed to say that a fundamental right cannot be waived by an individual. Neither can any statutory right be waived, normally. I would like to put it in this way that rights under the Trade Unions Act, 1926 cannot be waived by an Association on behalf of its members. Hence, the argument regarding waiver and acquiescence fails. Furthermore, this agreement is palpably unfair because it tends to bind the members of the Association, at successive points of time, to this agreement entered into on 24th April, 2009. This kind of an agreement, to be fair and to pass the test of arbitrariness and reasonableness, must be of specific duration, to be renewed or novated from time to time. This agreement entered into by six members of the Association in dubious circumstances, cannot bind all the members of the Association for an infinite period of time. For those reasons, even if the rest of the agreement is sustained by this court, it has to be superseded by a fresh agreement within six months from date. Otherwise the said agreement will automatically stand terminated by operation of this order. I order accordingly. Clauses 4,11,13,16 and 18 of the agreement dated 24th April, 2009 are struck down as unconstitutional and illegal.

This writ application is allowed to the above extent.

Certified photocopy of this Judgment and order, if applied for, be supplied to the parties upon compliance with all requisite formalities.

(I.P. MUKERJI, J.)

Later:

Learned counsel for the respondent Corporation prays for stay of operation of this judgement and order. Since certain clauses of the agreement have been held to be void and the Corporation has been directed to enter into a fresh agreement in the near future, there is no question of any stay. The prayer for stay is refused.

(I.P. MUKERJI, J.)

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