P L D 1967 Supreme Court 513 (PLP)

CORNELIUS, C. J.‑This appeal comes before the Court by special leave granted to the Karachi Electric Supply Corporation Limited to call in question the dismissal by a Division Bench of the High Court of a petition moved by the Corporation to obtain quashment in a certain respect of an order made by the First Industrial Court at Karachi upon an application presented to the said Court by the Labour Union of the said Corporation. By the said application, the Union had sought an authoritative interpretation of a settlement which had been arrived at on the 21st December 1964, between the Corporation and the Union, in particular of a provision in that settlement concerning revision) of grades of pay of non‑officer employees. It was submitted in the application that the Corporation was applying the terms of the settlement unjustifiably and unreasonably, to the detriment of the affected employees. The details of the application, of the settlement and of the interpretation given by the Industrial Court, which has received the approval of the High Court, will be considered presently. The High Court purported to dismiss the Corporation's petition on another ground as well, namely, that the said interpretation could not be said to be devoid of lawful authority, and consequently the jurisdiction under Article 98 of the Constitution was not attracted. In part, the argument which prevailed with the High Court was that an authority having jurisdiction may decide a matter within that jurisdiction rightly or wrongly, and the mere fact that a wrong decision is given even on law would not render the action devoid of lawful authority. On the latter point, the contention raised for the Corporation is that the special jurisdiction of the Superior Courts to regulate and supervise all processes involving the declaration of law, including interpretation of legal instruments, was clearly attracted in the case. It is the right of every citizen in Pakistan to be dealt with in accordance with law and only in accordance with law, and therefore any action of any authority which is taken otherwise than in accordance with the law as duly construed, would necessarily fall within the authority reserved to the Supreme Courts to declare the law. In this case the instrument which needed to be construed by proper process according to its terms was a memorandum of settlement reached between the Corporation and the Union, and duly recorded. This document in solemn form operated to regulate the relations between the Corporation and the Union for the period of its duration, namely, two years, in respect of rights which thereby became rights in law. The determination of the true meaning of this instrument in any particular, was essential to its validity in the eye of law, and as having legal effect between the parties. It could not be urged that if a wholly wrong construction were given by the authority, viz., the Industrial Court acting under section 35 of the Industrial Disputes Ordinance, 1959, that would be binding upon the parties and that the Superior Courts would remain powerless to correct such error. The effect would be that the settlement as a legal instrument would be implemented contrary to its true meaning, and there would be, on the part of the Superior .Courts, refusal to perform their duty of ensuring that the citizens involved in the matter were being treated in accordance with law. Section 35 of the Ordinance reads as follows:‑‑ "Interpretation of awards.‑(1) If any difficulty or doubt arises as to the interpretation of any provision of an award or settlement, it shall be referred to a Court constituted under this Ordinance. (2) The Court to which a matter is referred under sub section (1) shall, after giving the parties an opportunity of being heard, decide the matter, and its decision shall be final and binding on the parties." In this case, the Industrial Court duly heard both parties an gave its decision. The concluding words of the second sub section rendering the decision of the Industrial Court "final ant binding on the parties" are clearly not to be understood as excluding also the jurisdiction of the Courts, if properly invoked. The finality conferred upon the decisions of subordinate judicial and quasi‑judicial authorities by legal provisions of this kind has never been understood to act in restraint of the power of the Courts an in particular the Superior Courts to interfere in proper cases. Reference may conveniently here be made also to section 12 of the Ordinance, which provides for appeals to the High Court against any award of an Industrial Court. But in respect of other decisions by such a Court, the section lays down that such a decision "shall be final and shall not be questioned in an\ manner by or before any judicial or other authority". If a strict view be taken of the wording of this section, it would be e necessary to hold that even an interpretation of an award given under section 35 by an Industrial Court would not be appealable in the High Court. Now, the true construction of such a document as an award which determines legal relations between contesting parties, is no less essential to the integrity and validity of the award than are the terms in which the decisions incorporated in that award are expressed. It would be absurd to suppose that the decisions in themselves should be appealable, but that the true construction of a decision expressed in terms requiring such interpretation should not be appealable. Therefore, on a proper view, an appeal against an award must be deemed to include an appeal against an interpretation given to any part of an award by the Industrial Court to which that award pertains. Section 35 relates to interpretation of awards as well as settlements, and it is undeniable that in certain respects material to the present discussion a settlement is similar in its Affect to an award, Therefore, no greater finality need attach to an Industrial Court's interpretation of a settlement given under section 35 than can attach to interpretation of an award. It may be thought that the law has left a lacuna in this respect, but in the view that we take, the case can clearly be brought within the high principle that to place a true construction upon laws and legal instruments of all kinds is the special and peculiar responsibility of the Superior Courts, and if a subordinate judicial or quasi judicial authority should be found to have placed an untenable construction upon a legal instrument, which is in operation as between citizens, the special responsibility of these Courts is attracted for rectifying the matter. The exercise of lawful authority is subject to the necessity of interpretation of the law which is being applied, and where that law is wrongly interpreted the action cannot be held to be otherwise than devoid of lawful authority. Accordingly, in our opinion, the High Court bad jurisdiction to declare the law differently from the interpretation put upon it by the Industrial Court, if such interpretation were found to be incorrect. The settlement of the 31st December 1964, contained the following provision which called for interpretation by the Industrial Court:‑ "

1. Revision of Grades. (a) The Grades issued vide Office Order No. 14 bearing No. MD‑J/15/230, dated 5‑10‑64 would be amended as under:‑ Grade I ... ... 90‑2‑120 Grade II ... ... 100‑3‑150 Grade III ... ... 120‑5‑200 Grade IV ... ... 140‑10‑300 Grade V ... ... 210‑13‑444 Grade VI ... ... 250‑20‑550 Grade VII ... ... 300‑25‑700 (b) An increase of Rs. 21 would be allowed on the total consolidated pay as on 30th September 1964. if any employee already has had an increase in his pay of more than Rs. 21 as a result of re‑fixation of salary under Office Order No. 14 quoted above the increase over and above Rs. 21 would not be withdrawn but would be added to the salary as personal pay." It is important to note that this agreement was expressed to be an amendment of the earlier Office Order of the 5th October 1964. It follows that for a proper construction of this agreement, it should be laid side by side with the said Office Order and construed so that the latter order is amended only to the extent indicated in the terms of the agreement. The relevant part of the said Office Order reads as under:‑ Sub: Revision of pay scales‑Non‑Officers Cadre. "The question of rationalizing the existing scales of pay, with a view to afford immediate monetary benefit, has been under the consideration of the Management. . The matter has now been finalized. and the Revised Scales of pay are given in Appendix `A' to this Offce Order and will come into force with effect from 1‑10‑1964. (2) Salient features of the Revised Scales are as follows:‑ (i) Number of grades has been reduced from 12 to 7. (ii) Dearness Allowance has been merged with the basic pay. (iii) The Revised scales compare very favourably with corresponding scales under the Government and major Industrial concerns of the country. (3) Apart from adopting the New Scales of pay which are far better than the present scales, it has been decided that, to give an immediate monetary benefit the initial pay of the serving staff be fixed in the Revised Scales at the stage equal to, or, if there is no such stage, at the stage next above, the amount arrived at by allowing an increase of 5 % over the aggregate of their present basic pay and Dearness Allowance. (4) The date of accrual of annual increment in the revised scales will be the same as in the existing scales of pay. (5) While fixing pay in the Revised scales fractions of less than 50 paisas will be ignored and 50 paisas or more will be calculated as rupee one. (6) House rent, conveyance allowance and shoe and cap allowance as admissible under the existing rules will continue to be admissible." In this Order, special emphasis is laid on the provision of "immediate monetary benefit". This expression is used twice, once in the opening passage and again in the third paragraph where provision is also made for fixing salaries of existing employees in the revised scales. Ordinarily, when a revision of pay scales takes place, an employee is brought into the revised scale at a salary as closely proximate to his salary in the existing scale as is possible. Generally, the existing salary is raised to the next higher salary in the pay scale as revised. But this Office Order provided for bringing existing employees on to the new scales, at an appreciably higher figure, namely, that reached by adding five per cent to the "aggregate of their present basic pay and dearness allowance." If there was no stage in the pay scale exactly equal to the amount reached by adding five per cent. to their existing basic pay and dearness allowance, the employee would get pay at the stage in the revised time scale next above such amount. It is evident too from the wording of this provision that in the revised scale, the salaries that were shown were to replace the earlier basic pay and dearness allowance, and in paragraph 2 of the Order this was made further clear by saying that "dearness allowance has been merged with the basic pay". The distinction is of importance since there were other allowances besides, of which three are mentioned in paragraph 6 of the Office Order, namely, house rent allowance, conveyance allowance and shoe and cap allowance. These were probably available‑to all employees in the class, unlike charge allowance, which was attached to certain posts only. But so much is clear, namely, that the salaries shown in the revised scales replaced only two items from among the emoluments drawn prior to such revision, and these two items were basic pay and dearness allowance, and it was to these two items that the supplement of five per cent. was added by way of immediate monetary benefit". This Office Order is specifically mentioned in the agreement reproduced above, in sub‑paragraph (b). The agreement maintained the number of grades at seven, but altered tile time scales in each grade in a number of instances. Su‑paragraph (b) does not make mention of "immediate monetary benefit. It speaks of a lump sum addition of Rs. 21 to the emoluments as on the 30th September 1964, and then adds a clause, which has the effect of relating this supplement to the increase or "immediate monetary benefit" provided by the Office Order No. 14 by saying that if as a result of granting that benefit under the said Office Order, an employee had received a greater than Rs. 21 such excess would not be withdrawn, but would be shown in his case as personal pay. There was no provision made in the agreement for adjusting the salaries of existing employees in the new time scales, but that omission can he made good on the basis that since the agreement was art amendment of the Office Order No. 14, the provision for such adjustment made in the Office Order would still continue to operate. In other words, each employee would be brought until the new time‑scale at the stage equivalent to, or if there was no equivalent stage, at the stage next above the figure reached by adding to his basic pay plus dearness allowance, as on the 30th September 1964, the sum of Rs.,

21. Reading the agreement with the Office Order, there seems to be no escape from the conclusion that the "immediate monetary benefit" that was given by way of a percentage increase on the aggregate of basic pay and dearness allowance in the Office Order was replaced by a flat rate addition of Rs. 21 under the agreement. Following the agreement, an Office Order was issued on the 31st December 1964 in pursuance of the agreement and "in partial modification of the orders contained in Office Order No. 14." This Office Order, which is No. 25 stated as follows:‑ "It has been decided to give the monetary benefit of Rs. 21 P. M., to the existing staff with effect from 1st October 1964, instead of the increase allowed under Office Order No. 14 dated 5th October 1964. If, however, any employee has already had an increase in his pay of more than Rs. 21 P. M., as a result of fixation of pay under Office Order No. 14, referred to above, the amount over and above Rs. 21 P. M., will not be withdrawn, but will be treated as personal pay." On the view expressed above as to the true construction of the agreement in relation to Office Order No. 14, what was said in Office Order No. 25 would appear to be in accordance with those instruments. On the 1st January 1965, a further Office Order No. 4 was issued in two paragraphs. The first paragraph set out the final revised time scales in the seven grades, and it is to be noted that it was expressly stated that this was by way of amendment of the time scales as appearing in Office Order No.

14. In paragraph 2 of Office Order No. 4, instructions were given for re‑fixing salaries of the existing staff in the new time scales, and three broad principles were laid down. The first stated that the monetary benefit was to be Rs. 21 P. M., "over the aggregate pay and dearness allowance as on 30th September 1964." The second principle was to apply where by giving the supplement of Rs. 21 P. M., an employee's salary went beyond the maximum of his time scale and it was laid down that in such a case the employee would receive the excess as personal pay so long as he remained in that grade, and that the excess would be merged in his pay on his promotion to the higher grade. Since the time scales of pay were expressed in terms of a merged figure for basic pay and dearness allowance, it seems clear that the Corporation did not understand the new agreement as providing for any items in the emoluments except the basic pay, the dearness allowance and the supplement of Rs. 21 as relevant for the fixation of an existing employees salary at one of the stages in the new time scales. The third principle laid down was that if the amount reached by addition of a supplement of Rs. 21 to the basic pay and the dearness allowance (referred to as "consolidated pay") did not correspond exactly to a stage in the new time scale, then the salary of the employee in such time scale would be fixed at the nearest lower stage and the excess to which he would be entitled would be shown as personal pay, not to be adjusted against future increments so long as the employee continued to be in that time scale. Here, there was a departure from the rule laid down in Office Order No. 14, namely, that the salary would be fixed at the next higher stage. The effect of the change made in Office Order No. 4 was that the employee would lose one increment. This Office Order said nothing as to a case where the 5 % increase under Office Order No. 14 gave an employ a greater benefit than Rs.

21. Since its purport was not regulatory, but merely advisory, it cannot be construed as a denial of the benefit conferred in this behalf by the terms of the agreement, viz., that the excess would be paid, but would be treated as personal pay, that is, as pay not provided for in the time‑scale. On the 22nd March 1965, the Union moved their application asking for an authoritative interpretation of the agreement, with particular reference to the gaining of advantage in respect of the charge allowance to which reference has already been made. They relied on an order issued eleven years earlier in 1953 by the Managing Director in which it was said that "charge allowance which is personal pay forms part of the salary itself and will carry all the benefits of dearness allowance, provident fund and bonus as applicable to basic salary". It was claimed that it was the usual practice "to include the charge allowance as personal pay" carrying "all the related and admissible benefits". The application mentioned that a direction had been issued by the Principal Administrative Officer on the 6th March 1965, with respect to certain employees who were in receipt of a charge allowance that their salaries would be fixed in accordance with certain office orders issued on the 4th December 1960 of which no copy has been placed on this record). It was directed that in so fixing salary "charge allowance will not be taken into account, which will continue to admissible with further orders in addition to the consolidated pay in the revised scale". The Union contended that this operate to the disadvantage of the affected employees and proceeded to give an illustration. A certain employee who on the 30th September 1964 was receiving the following emoluments was taken as an example:‑ Rs. (a) Basic pay ... ... 196 (b) Dearness Allowance ... ... 65 (c) Charge Allowance ... ... 25 (d) House Rent ... ... 10 (e) Conveyance ... ... 5 The Union contended that the first three items should be added together and that to this total should be added a supplement of Rs. 21, thus bringing the employee's salary for purpose of induction into the new time scale to Rs.

307. The new time scale being Rs. 210‑13‑444, they contended that the appropriate stage for this particular employee was Rs.

314. They repeated also in paragraph 10, but without indicating to what purpose, the provision for induction contained in Office Order No. 14, viz., to adjust the above employee in the new scales of pay (with effect from 1st October 1964), at the stage equal to or, if there is no such stage, at the stage next above the amount arrived at by allowing an increase of 5 % over the aggregate of their present basic pay and Dearness Allowance." But they did not claim that this increase should be applied to the aggregate of Rs. 307 previously reached. Had they done so, adjustment would have required to be made at the stage nearest to the total of two items, namely, Rs. 307 plus 5 Y. of Rs. 307,i.e., Rs. 307 plus Rs. 13.35 equaling Rs. 322.35 and the appropriate stage for the induction of the employee in question into the new time scale would then have been Rs. 327 and not Rs. 314, as they had claimed. They went on to complain that the Corporation had inducted the employee into the time scale at Rs. 288 which figure was obviously reached on the basis of applying the supplement of Rs. 21 only to the aggregate of the basic pay and the dearness allowance. Now, to the figure thus reached by the Corporation, three supplementary items would require to be added, namely, a charge allowance of Rs. 25, house rent of Rs. 10 and a conveyance allowance of Rs. 5 making total emoluments of Rs. 288 plus Rs. 40 equals Rs.

328. On the calculation which the Union by this application thought to be correct, the employee stood to get Rs. 314 plus Rs. 10 as house rent and Rs. 5 as conveyance allowance making Rs. 329, a difference of one rupee only, which resulted from the incident that the advantage from being taken to the next higher stage was a rupee greater according to their calculation, then 'it was when the Corporation's formula was applied. It should be clear then that the application suffered from some form of misunderstanding. By the addition of the charge allowance to the principal items of basic pay and dearness allowance, for the purpose of induction into the new time‑scale, in one case there might have resulted an addition of a few rupees, but on the other hand, in some other cases, there might have been a disadvantage. But the principal flaw in the argument put forward by the Union lies in this that the charge allowance is not to be regarded .as relevant to salary in the time scale, since it goes with the post, and is in essential respects an additional sum personal to the occupant of that post. A time scale cannot be thought to include such supplementary emoluments. It sets out the general incremental rates of pay which are available to all employees in a particular grade, irrespective of the posts which they hold, and takes effect by virtue of the stage at which an employee enters the time scale of a grade, and the length of his service in that grade. Supplementary emoluments whether general, e.g., dearness allowance or individual, e.g., personal pay, or special to a post, e.g., charge allowance are in addition to the sum payable on the time‑scale, and cannot be added for the purpose of induction into such time‑scale. The process by which the Industrial Court reached its conclusions may now be considered. Founding on the memo randum of 1953 which has been referred to above, the Union bad claimed that charge allowance was to be considered as part of the "consolidated pay". The memorandum had said that charge allowance forms part of the "salary itself and will carry all the benefits of dearness allowance, provident fund and bonus as applicable to basic salary". But the context in which that rule was laid down is not set out is the papers of the case, whereas the Office Order No. 14 and the subsequent agreement seem very clearly to provide that the time scale was to show the aggregate of the previously paid basic pay and dearness allowance only, without any supplements. To obtain inclusion of charge allowance in the salary shown in the time scale for the purpose of gaining the benefits of dearness allowance, provident fund and bonus thereon would in our opinion, have required either a fresh settlement or in default thereof, a fresh determination under the provisions of the Industrial Disputes Ordinance. Such a result could not be obtained by a mere request for interpretation of the provisions of the memorandum of settlement, for in that memorandum, and the connected papers, it appears very dearly that the new time scales showed the merged basic pay and dearness allowance only. The fact that in the Office Order No. 14, there was no mention of charge allowance in our view reflects the true position, viz., that the charge allowance, unlike house rent, conveyance allowance and possibly shoe and cap allowance, was not a general payment made to all members of the staff, but was attached as a supplementary emolument to particular posts and therefore did not require to be dealt with in a document of general application such as the Office Order No.

14. However, the Industrial Court relying on the memorandum of 1953, having first held that charge allowance was part of the basic pay, proceeded thereafter to hold that the expression "consolidated pay" after "1‑10‑64 should mean basic consisting of (original basic wage plus charge allowance) plus dearness allowance" and further held that "the five per cent increase which has been allowed by the Corporation would therefore be on this total amount and not only on the basic wage and dearness allowance as has been subsequently interpreted" in the impugned direction of the 6th March 1965. The final direction of the Industrial Court is expressed in following words:‑ "The `consolidated pay' as on that date 30‑9‑1964 would mean basic wage plus charge allowance plus Dearness Allowance plus Rs. 21 allowed by clause 2 (b). The 5 / increase would be allowed on the entire amount so calculated after Rs. 21 added to it in view of sub‑clause (b), clause 2 of the agreement." The Industrial Court did not feel the necessity of applying any recognised process of interpretation to the legal instruments concerned for arriving at this somewhat remarkable conclusion. It has been seen already that the final agreement in the memorandum of settlement was expressed as an amendment of the relevant terms in Office Order No. 14, and that reading the two together it was plain that the "immediate monetary benefit," which was afforded by Office Order No. 14 in the shape of a 5 per cent. increase on the basic wage plus dearness allowance as drawn on the 30th September 1964, was replaced in the final agreement by a flat rate supplement of Rs. 21 to all affected workers. That there was such a substitution appears in the final agreement, where a provision was made that if as a result of adding the five per cent. increase provided by Office Order No. 14 a salary had been reached which was in excess of the aggregate of such basic wage plus dearness allowance, plus Rs. 21 then the excess was not to be withdrawn from the employee in question, but he was to be allowed to draw it, as personal pay. The conclusion that the five per cent. increase was to be allowed after adding the supplement of Rs. 21 is therefore entirely untenable. Moreover, as has been seen from the actual instance given in the application of the Union seeking interpre tation, they did not in their calculation seek to add the five per cent. increase after adding the supplement of Rs.

21. The mention of the five per cent. increase was made only because it finds mention in the clause which sets out the rule of induction, which was sought to be applied. It would, therefore, appear that on both points, namely, (1) the inclusion of the charge allowance in the salaries appearing in the new time scales, and (2) the allowance of a five per cent. increase over and above the supplement of Rs. 21 and not only on that amount, but also on the charge allowance, the Industrial Court's view was clearly wrong and was not based on a propel construction of the governing instruments, The High Court, however, upheld the conclusion of the Industrial Court in a paragraph which reads as follows:‑ "The manner of calculation which has been upheld by the industrial Court finds support from the Memorandum of Settlement itself. In sub‑clause (b) of it, which has been reproduced above, it is stated that the `increase of Rs. 21 would be allowed on the total consolidated pay as on 30th September 1964'. This means that consolidated pay as on 30th September 1964, is to be ascertained firstly and then an increase of Rs. 21 is to be allowed on it. If this is done with reference to the 30th of September 1964, then the five per cent. increase which was allowed by office Order No. 14 on the 5th of October 1964, must come after it. The Industrial Court was thus right in holding that five per cent. increase was to be granted after adding Rs. 21 to the consolidated pay of the employees." This conclusion appears to be based on two grounds principally; the first being the memorandum of 1953 and the second that in the body of their application seeking interpretation of the agreement, the Union had made mention of the five per cent. increase. For reasons which have been set out in detail above, we consider that these grounds are inadequate to support the conclusion, which cannot be sustained on any reasonable construction of the governing instruments as interpreted in accordance with proper principles. The Union itself never sought such an aggregation of the benefits given by the agreement with those previously incorporated in Office Order No.

14. Its application clearly implies that the latter benefits were to be substituted for the former. But in one respect, the interpretation put upon the final agreement in the Office Order No. 4 is plainly wrong. That is to be found in the instruction that in the absence of an equivalent stage for the purpose of induction, an employee would be placed in the new time scale at the stage next below the sum of his basic pay‑ and dearness allowance, as on the 30th September 1964, and the difference would be paid to him as personal pay. As has been said, this would have the practical result that he would lose one year's increment, and it would also clearly be contrary to the provision in that behalf in Office Order No. 14, which had not been modified or amended in any respect under the final agreement. On this analysis of the factual aspects of this case and on the view that the power and duty of the Superior Courts to interpret and declare the law cannot be circumscribed by any provisions statutory or otherwise giving finality to the interpre tations placed upon operative legal instruments by subordinate judicial or quasi‑judicial authorities, it becomes necessary to make the following declaration. On a true construction of the agreement, as to revision of grades in the memorandum of settlement of the 21st December 1964, it is declared that with reference to a non‑officer employee holding a post carrying a charge allowance, such charge allowance is not to be taken into account in determining the stage at which he shall be inducted into the new tithe scale, but the determination shall be made exclusively in relation to the basic pay plus dearness allowance as on the 30th September 1964, plus Rs. 21 and if the aggregate so reached is not exactly equivalent to a stage in that time scale, then the point of induction will be at the next higher stage. In a case where the figure of Rs. 21 is less than 5 % of the basic pay plus dearness allowance as on the 30th September 1964, the difference would be allowed to be drawn as personal pay, but this excess, being treated as a supplement, would not be taken into account in fixing the stage of induction. On behalf of the Union, Mr. Brohi at the conclusion of the argument urged that the settlement had already run its full course of two years, and it would be hard indeed if the employees in question were now required to refund what they bad received during that period in excess of that which the Court may find to have been legally due. That is a consideration which cannot weigh with the Court, when in the discharge of its duty it is required to give the true meaning to words appearing in a legal instrument. It is relevant to and important for the maintenance of harmonious relations between the employer and the employees. But it is of at least equal importance for that purpose that the Industrial Disputes Ordinance and all legal instruments issued there under should be interpreted and applied as between the parties according to their true meaning and tenor so that their relations may be governed by a rule of law. The Court's duty is to declare the meaning and tenor of the agreement, but as to its implementation with respect to a period in the past, that may well be left to the good sense of the Corporation and the Union to determine, ambicably if possible, but otherwise through the procedures provided by the Ordinance. As the points that arose were of considerable difficulty, we leave the parties to bear their own costs, while allowing the appeal. A. H. Appeal allowed.