Empire Industries Limited vs State Of Maharashtra Industries, ...
2001 Latest Caselaw 99 Bom

JUDGMENT

F.I. Rebello, J.

1. The petitioner is a public limited company incorporated under the provisions of the Companies Act, 1956. It has a factory at Ambarnath, which was engaged in the business of manufacturing of E.O.T. Cranes. The workmen employed in the factory were represented by the Association of Engineering Workers, a recognised Union under the M.R.T.U. & P.U.L.P. Act, 1971, the respondent No. 3 herein. The petitioners signed various settlements with the said Union. The last such settlement was signed on December 24, 1986 which expired in June, 1989. Afresh charter of demands was submitted on July 27, 1989. The petitioners could not meet with the demands as according to them they were incurring heavy losses and that at the material time there were accumulated losses of Rs. 11.05 crores. It is contended by the petitioners that as the demands of the workmen were not met the workmen started resorting to various unlawful activities. Various meetings took place between the representative of the petitioners and the office bearers of the recognised Union, wherein they were examined and the circumstances under which the said factory undertaking was not in a position to meet their demand. It was pointed out according to the petitioners that unless the recognised union was agreeable for imposition of ceiling of D.A. as also reduction in manpower, etc., the factory would not be economically viable. The respondent No. 3 did not accept the said demands inasmuch as the workmen failed to see the petitioners point of view, but on the contrary resorted to various types of unlawful activities.

2. The petitioners filed complaint bearing No. 368 of 1991 before the Industrial Court, Thane. An ad interim injunction was obtained against the office bearers and the Union. It is contended that on account of the unlawful activities the entire atmosphere in the factory at Ambarnath was tense as a consequence thereto there was no discipline whatsoever in the factory. It is the case of the petitioners that the respondent No. 3 Union/member employees continued to indulge in various unfair labour practices despite the order of injunction. The petitioners were compelled to file Criminal Complaint (ULP) No. 126 of 1991 against the respondent No. 3 Union and its members before the Labour Court, Thane. As the respondent No. 3 Union and their workmen did not concede the petitioners demand for imposition of ceiling on D.A. and reduction in manpower, etc., the petitioners issued a notice of lock-out dated September 28, 1991. Simultaneously operations of manufacturing activities were also suspended with immediate effect. It is the contention of the petitioners that the petitioners have assigned reasons for suspension of operation as well as declaring lock-out of the factory which are self explanatory.

3. It is the case of the petitioners that the Respondent No. 2 Union for the first time by its letter dated November 20, 1991 claimed that majority of the workmen of the factory had become its members and the petitioners should negotiate and sign settlement with the respondent No. 2. The respondent No. 3 which was recognised Union filed a complaint being complaint No. 10 of 1992 and obtained an ad-interim order restraining the company from signing any settlement with any other Union.

That order was passed on January 7, 1992. It is the case of the petitioners that as the factory/undertaking was in financial doldrums and the same had become economically non-viable, the petitioners decided to close down the factory. An application was moved under Section 25-O of the Industrial Disputes Act, 1947. The State Government, however, rejected the application vide order dated March 21, 1992. A review was preferred against the said order, which was also dismissed. The petitioners contend that they were astonished when on September 23, 1992 the respondent No. 1 issued two orders, the first being an order under Section 10(1)(d) of the Industrial Disputes Act. By the said order the charter of demands raised by the respondent No. 2 was referred for adjudication of the Industrial Tribunal at Thane. In so far as the second order is concerned, it was issued under Section 10(3) of the Industrial Disputes Act, 1947 prohibiting the continuation of lock-out at the said factory. It is the case of the petitioners that the said two orders had been issued by the respondent No. 1 at the instance of respondent No. 2 Union. It is pointed out that the charter of demand served by respondent No. 3 has not been referred by the respondent No. 1. It is contended that the respondent No. 3 being the sole collective bargaining agent, the respondent No. 2 had no right whatsoever in law to raise any general charter of demands in relation to the workmen working in the factory. The petitioners have challenged the said orders by the present Writ Petition which was admitted on November 18, 1992. This Court pending the hearing and final disposal of the petition granted stay in so far as order dated September 23, 1992 prohibiting lock-out.

4, At the hearing of the petition though various grounds had been raised in the petition Shri K.K. Singhvi, learned Counsel has pressed the following two grounds:

(a) The reference at the instance of respondent No. 2 could not have been made as it was not a recognised Union under the M.R.T.U. & P.U.L.P. Act. The recognised Union was the 3rd respondent. The reference, therefore, is bad and

consequently liable to be quashed and set aside.

(b) The employer had disputes with the workmen in so far as (a) D.A. and (b) reduction in staff. There was only a reference to the Industrial Tribunal in so far as D.A. is concerned. There was no reference in so far as reduction of staff is concerned and consequently the order prohibiting the continuance of lock-out was contrary to Section 10(3) of the Industrial Disputes Act.

5. On the other hand on behalf of the respondent No. 2 it is contended that the orders did not disclose any infirmity in as much as it was within the competence of the State Government to make a reference. It is further contended that in so far as the demands raised by the petitioner company the demand in so far as D.A. was concerned was referred for adjudication and in so far as reduction in staff is concerned, it was merely discussed by the petitioners with the Union and workmen.

6. Let me now deal with the first contention that a reference at the behest of respondent No. 2 could not have been referred to by the State Government for adjudication. This contention is based on the premise that Respondent No. 2 is not the recognised Union under the M.R.T.U. & P.U.L.P. Act. Section 2(k) of the 1.D. Act defines Industrial Dispute to mean any dispute or difference between employer and employees or employer and workmen or between workmen and workmen which is connected with the employment or non-employment or the terms of employment or with conditions of labour, of any person. Under Section 10 of the 1.D. Act a power is conferred on the appropriate Government when in its opinion, any industrial dispute exists or is apprehended at any time then by order in writing to refer the dispute to the Tribunal for adjudication. It is, therefore, clear that if the attention of the Government is invited that there is an industrial dispute or a threatened industrial dispute it can invoke its powers under Section 10(1) and from the material before it refer the dispute to the Industrial Tribunal or Labour Court as the case may be. Therefore, the essential requirement for reference is the existence of the Industrial dispute. Who raised the dispute whether a recognised Union is immaterial at that stage, as long as the opinion is based on the material before it. Let us now examine whether the provisions of the M.R.T.U. & P.U.L.P. Act create a bar for reference by the appropriate Government in a case of an existing dispute and/or a threatened industrial dispute. It is not necessary at this stage to cite the various judgments of the Apex Court wherein it has considered the provisions of the Industrial Disputes Act and the M.R.T.U. & P.U.L.P. Act. Suffice it to say that the Apex Court has noted that the two enactments are complimentary and supplementary to each other. Under the provisions of M.R.T.U. & P.U.L.P. Act in so far as bargaining is concerned certain rights have been conferred on the recognised Union to the exclusion of a non-recognised union. Similarly also in so far as representation before a forum created under the Act some rights have been conferred on a recognised Union. Therefore, what the M.R.T.U. & P.U.L.P. Act contemplates is that in so far as representation is concerned the Union which is recognised has first right as against the unrecognised Union. This right of representation by recognised union is not an embargo on the exercise of power by the State Government under Section 10. The provisions of M.R.T.U. & P.U.L.P. Act, 1971 do not create such an embargo. The exclusionary provision of the M.R.T.U. & P.U.L.P. Act, 1971 limits itself to the extent that if any proceeding in respect of any matter falling within the purview of the M.R.T.U. & P.U.L.P. Act is instituted under the said Act then no proceedings shall at any time be entertained in respect of that matter under the Central Act or as the case may be under the Bombay Act similarly and if any proceeding in respect of any matter within the purview of the Central Act or as the case may be the Bombay Act is instituted then no proceedings can be entertained by the Industrial Tribunal or Labour Court under the Central Act. Section 59, therefore, ousts the jurisdiction of the Industrial Tribunal or Labour Court under the

I.D. Act if the proceedings are pending or initiated under the M.R.T.U. & P.U.L.P. Act in respect of the same subject matter. We are not really concerned with Section 59 as what was contended was the right of the State Government to refer the dispute at the behest of an unrecognised union on the charter of demand being raised by the Unrecognised Union. As pointed out earlier Section 10 is a power conferred on the State Government for the purpose of promoting industrial peace by referring disputes existing or threatened between the employer and employee for adjudication. It is irrelevant as to who raises the dispute as long as the dispute has been raised. If it is the contention of the employer that the dispute does not have backing of substantial number of workmen this will be a contention to be considered at the stage when the reference comes up for adjudication. If it is the case of the employer that the respondent No. 2 has no right to represent at the adjudication again that will be an issue at the stage of adjudication. Considering the scheme of the M.R.T.U. & P.U.L.P. Act it does not oust the jurisdiction of the appropriate Government in making a reference when there are disputes or threatened disputes. The first contention, therefore, raised must be rejected.

7. We then come to the second contention as raised on behalf of the workmen namely that even if the dispute in respect of D.A. had been referred for adjudication the dispute in so far as reduction in manpower is concerned was not referred to adjudication and consequently the order banning the continuance of the lock-out is without authority of law. Reliance for that purpose was placed on the judgment in the case of Delhi Administration v. Workmen of Edward Eventers and Anr. 1978-I-LLJ-209, In that case the issue before the Apex Court was the exercise of power by the appropriate Government to ban a strike under Section 10(3) of the I.D. Act. The Apex Court noted that the exercise of that power springs into existence only when such dispute has been made the subject of reference under Section 10(1) of the Industrial Disputes Act. The Court noted that firstly there must be an industrial dispute. Secondly, such dispute must have been already referred for adjudication. It is only if this is done that the power to prohibit in respect of a strike could be exercised by the State Government. The Apex Court also noted that on reference of a dispute a prohibition of a strike on other demands which have not been referred is impermissible. It is based on this contention that it is sought to be canvassed before this Court that merely because one of the demands was referred without referring to the other demand of reduction of staff, the State Government could not have banned the lockout.

8. To understand that argument it should be in the first point possible to understand the scheme of the Industrial Disputes Act. The Industrial Disputes Act contemplates employer on the one hand and workmen on the other. In so far as workmen are concerned their conditions of service can be settled by conciliation by settlement and/or by passing of an award. In other words the workman cannot confer upon themselves the conditions of service without they being settled in conciliation or settlement or adjudication. On the other hand the right of an employer to manage its own affair is not taken away by the Industrial Disputes Act. What the Industrial Disputes Act does is to put embargo on the rights of the management in the exercise of its managerial function. This is in furtherance of the scheme of the Industrial Disputes Act to prevent industrial disputes and if there are disputes to follow the adjudicatory procedure. It is in these circumstances that Sections like Sections 9-A, 25-O and the other provisions pertaining to retrenchment and termination have been introduced. In the instant case right of the management to retrench a workman cannot be prohibited by the Government unless it falls within any of the prohibitive provisions of the Industrial Disputes Act. In that context let us therefore, examine whether assuming for the moment that such a demand was raised by the employer in so far as reduction of workmen in the establishment are concerned, whether Section 9-A would be attracted. As pointed out earlier as held by the Apex Court in the case of Robert D'souza v. Executive Engineer,

Southern Railway 1982-II-LLJ-330 retrenchment cannot be a subject matter of challenge under Section 9-A of the Industrial Disputes Act. That is purely a managerial function. At the highest a workman may complain that the retrenchment is contrary to the provisions of the I.D. Act whereupon an industrial dispute can be raised and referred.

However, the employer is not bound to follow the procedure under Section 9-A of the Industrial Disputes Act. It is in that context the question arises whether there was any fetter on the employer in exercise of its managerial powers to reduce surplus labour and/or retrench or terminate their services. Section 9-A comes into operation when an employer proposes to effect any change in the conditions of services applicable to any workman in respect of any matter specified in the Fourth Schedule. In other words in those situations when the IV Schedule is attracted management has to follow the procedure set out under Section 9-A. A perusal of the IV Schedule would indicate one such item being Item No. 11 which reads as under:

"Any increase or reduction (other than casual) in the number of persons employed or to be employed in any occupation or process or department or shift not occasioned by circumstances over which the employer has no control."

Therefore, if the employer wanted to reduce or remove surplus workmen the Industrial Disputes Act itself provide the manner and mechanism by which that exercise could have been undertaken. In other words apart from following the procedural requirement there is no embargo on the employer to reduce the number of workmen, This is not therefore, a dispute which the employer was bound to raise with the workmen and to have it referred for adjudication at the instance of the Employer. On the contrary on notice being issued under Section 9-A the workmen on the other hand could have raised the dispute in so far as the notice of change is concerned. Therefore, it is clear that the contention on behalf of the employer that the issue of reduction of manpower also ought to have been referred for adjudication cannot be borne out considering the scheme of the Industrial Disputes Act. In case of reduction of workmen if surplus, the Act itself provides a mechanism. Even in a case where there is likely retrenchment occasioned by rationalisation, standardisation or improvement of plant or technique the employer can so do by following the procedure laid down under Section 9-A. That being the case of the judgment of the Apex Court in the case of Delhi Administration (supra) would be inapplicable considering the case in hand and it would be inapplicable in so far as the retrenchment/termination of the services of surplus workmen are concerned. It was within the power of the appropriate Government, once the dispute was referred, to ban the continuation of the lock-out. In the instant case the material on record itself would show that in so far as dispute regarding reduction of D.A. was referred to industrial adjudication. That had to be done as it was a condition of service of the workmen which was likely to be affected. Hence the second contention raised challenging the notice banning the lock- out has also to be rejected. It may be made clear that this Court has not gone into the issue as to whether the lock-out at its inception was legal or its continuance thereafter was legal or illegal. Those are matters for decision in industrial adjudication, if there be any. The issue before this Court on this aspect was only in so far as the banning of the lock-out by the appropriate Government under Section 10(3) of the Industrial Disputes Act.

9. Having said so, Rule discharged. The interim relief granted on November 18, 1992 is vacated. In the circumstances of the case there shall be no order as to costs.

10. Both parties/Authorities to act on an ordinary copy of this order duly authenticated by the Sheristedar/P.A. of this Court.

11. Certified copy expedited.