Union Bank Of India Employees ... vs Union Of India (Uoi) And Ors.
2002 Latest Caselaw 899 Bom

JUDGMENT

R.J. Kochar, J.

1. The petitioner claims to be All India Employees Union of the employees employed by the respondent No. 2-Bank. The petitioner Union is aggrieved by the Order of the respondent No. 1 dated 24-5-1995 in exercise of its powers under Section 10(1)(c) read with Section 12(5) of the Industrial Disputes Act, 1947 refusing to refer the industrial dispute raised by the petitioner Union for adjudication to the Industrial Tribunal.

2. It appears that by a letter dated 3-8-1992 the petitioner Union submitted a demand and raised a dispute against the respondent Bank. The relevant portion of the letter reads as under:

(a)     the interest rate be brought down to 4%.
 

(b)     Any other steps which are just and equivable to be taken with the help of the machinery available at your office. 
 

It appears from the demand letter that the employees of the Bank were getting the facility of clean loan for several years at the rate of 4% p.a. The Management had unilaterally increased the rate of interest to 7.5% and 16.50% p.a. to those who joined the Bank or who become eligible to avail the loan on or after 1-4-1991. The Union demanded for continuation of the interest rate at 4% p.a. which was prevalent in the past for several years.
 

3. It appears that the respondent Bank did not accede to the demand, and therefore, an industrial dispute came to exist for which the petitioner Union approached the Conciliation machinery under Section 12(5) of the Act. It appears that the Conciliation Officer commenced and concluded the conciliation proceedings after holding discussions with the parties. He recorded his failure report in his report dated 23-9-1994 which was submitted to the Secretary of the respondent No. 1 who is impleaded as respondent No. 3 in the present Writ petition. It appears that the respondents. Nos. 1 and 3 considered the failure report of the Conciliation Officer and formed an opinion that the dispute was not fit for reference to the industrial tribunal for adjudication on the ground which was mentioned on the back of the page. The grounds which are given to refuse to refer the industrial dispute for adjudication are reproduced hereinbelow :

"It is reported that the rate of interest in respect of clean loan has been enhanced in pursuance of the directions of the Ministry of Finance, Government of India, which are binding on all banks. However, an option has been given to the employees either to be governed by the existing scheme or the revised one. As there is no change in the service conditions, the provisions of Section 9A of the I.D. Act 1947 are not attracted in this case."

4. Shri Bhange, the learned Counsel for the petitioner Union submits that the Bank employees were getting the facility of clean loan at the rate of 4% p.a. for last several years but the respondent No. 2 Bank discontinued the same without any bilateral negotiations in respect of the employees who joined on and after 1-4-1991 and who became eligible after that date. Shri Bhange pointed out that unilateral increase in the rate of interest was without any discussion with the Union and without giving a notice of change under Section 9A of the Industrial Disputes Act. Shri Bhange pointed out the specific Item No. 8 in Schedule IV of the Act viz. "Withdrawal of any customary concession or privilege or change in usage." According to Shri Bhange the withdrawal of such customary concessions/privileges and change in usage which was prevalent in the Bank for last several years was in contravention of Section 9A of the Act as no notice of change in that respect was given by the Bank. According to the learned Advocates, the said unilateral action of the Bank created an industrial dispute which required adjudication. Shri Bhange further adds that it was not open for the respondents. Nos. 1 and 3 to have undertaken the exercise of adjudication of the said dispute which was not within their jurisdiction. Shri Bhange contends that as soon as the Conciliation Officer recorded the failure report and submitted the same to the appropriate Government the respondents. Nos. 1 and 3 ought to have referred the said dispute for adjudication to the Industrial Tribunal. Shri Bhange points out from the grounds given by the authorities that they had virtually adjudicated the industrial dispute when they concluded that there was no change in the service conditions and that the provisions of Section 9A of the Act were not attracted in this case.

5. On the other hand Shri Rajguru, the learned Counsel for the respondent Nos. 1 and 3 submits that getting a clean loan at the rate of 4% p.a. was not a service condition and that the Bank had increased the rate of interest under the directions from the Finance Ministry, and therefore, no industrial dispute could be said to have existed merely because the Union demanded the lowering down of the rate of interest at 4% for the employees who were employed on and from 1-4-1991. Shri Rajguru strongly defended the refusal by the authorities to refer the industrial dispute for adjudication.

6. I agree with the submissions of Shri Bhange that an industrial dispute clearly existed when the Union had submitted its demand to the Management of the respondent No. 2 Bank that the facility of the clean loan at the interest rate of 4% should be continued and made available also to the employees who joined the Bank on and after 1-4-1991 and who became eligible to get such loan from that date. There is no substance in the contention of Shri Rajguru that to get the loan at the 4% p.a. was not a term of contract of service. Shri Rajguru however forgets that under the Industrial Disputes Act, 1947 the contract of service can be modified and the workmen are entitled to demand change in the service conditions and create new service conditions if they justified their demands before the adjudication authorities. Under the Industrial Disputes Act, the adjudication machinery is empowered to vary or modify the terms of contract of employment. This is the law very well settled from 1950 onwards. In the present case what the petitioner Union has done is the same by putting forward a demand to the Management that the clean loan should be made available to the employees at the rate of interest @ 4% p.a. Whether their demand is justified or not would be a matter of adjudication and it is not for the appropriate Government to decide whether their demand was justified or not and whether any option was available to the employees either to be governed by the existing scheme or the revised one or that whether there was any change in the service conditions and whether there was violation of Section 9A of the Act or not. All these points could not have been adjudicated by the Desk Officer of the appropriate Government while refusing to refer the industrial dispute for adjudication. It is for the adjudication machinery to decide the entire industrial dispute either way on merits of the dispute. It is crystal clear from the order of the Desk Officer of the respondent No. 1 that he had adjudicated the matter while refusing to refer the dispute for adjudication which he had no authority or power or jurisdiction. In my opinion the dispute is writ large on the face of record. The existing custom, privilege or usage arising out of bilateral understanding between the parties which continued for years together about which there is no dispute before me, as reflected in circular dated 17-5-1989 (page 25 of the Paper Book). This can be very conveniently named as custom, concessions or privilege as covered under Item 8 of Schedule IV of the Act which certainly attracts a notice of change under Section 9A of the Act. If the respondent bank has increased the rate of interest from 4% to 7.5% and 16.5% even purportedly acting under the Circular of the Finance Ministry it brings about a change in the Item 8 of Schedule IV of the Act. It, therefore, appears that the industrial dispute in that respect did arise between the parties and it was, therefore, necessary for the appropriate Government to have referred the said industrial dispute for adjudication and not to come to its own conclusion which the appropriate Government has done in the impugned order to refuse to refer the industrial dispute for adjudication.

7. In the aforesaid circumstances the impugned order passed by the appropriate Government is without any power and jurisdiction under Section 10(1) read with Section 12 of the Industrial Disputes Act. The industrial dispute between the parties did exist and it did require adjudication. The appropriate Government could not have refused to refer the said industrial dispute for adjudication. It could not have adjudicated itself as it was done as reflected in the order of reference. Shri Bhange submits that this Court should direct the State Government to refer the dispute for adjudication. He has placed reliance on the judgment of the Supreme Court in the case of M.P. Irrigation Karmachari Sangh v. State of M. P. . The Supreme Court has observed as under:

"Therefore, while conceding a very limited jurisdiction to the State Government to examine patent frivolousness of the demands, it is to be understood as a rule, that adjudication of demands made by workmen should be left to the Tribunal to decide. Section 10 permits appropriate Government to determine whether dispute exists or is apprehended and then refer it for adjudication on merits. The demarcated functions are (1) reference, (2) adjudication. When a reference is rejected on the specious plea that the Government cannot bear the additional burden, it constitutes adjudication and thereby usurpation of the power of a quasi-judicial Tribunal by an administrative authority namely the appropriate Government. In our opinion, the reasons given by the State Government to decline reference are beyond the powers of the Government under the relevant sections of the Industrial Disputes Act. What the State Government has done in this case is not a prima facie examination of the merits of the question involved. To say that granting of dearness allowance equal to that of the employees of the Central Government would cost additional financial burden on the Government is to make a unilateral decision without necessary evidence and without giving an opportunity to the workmen to rebut this conclusion. This virtually amounts to a final adjudication of the demand itself. The demand can never be characterized as either perverse or frivolous. The conclusion so arrived at robs the employees of an opportunity to place evidence before the Tribunal and to substantiate the reasonableness of the demand."

7. There may be exceptional cases in which the State Government may, on a proper examination of the demand, come to a conclusion that the demands are either perverse or frivolous and do not merit a reference. Government should be very slow to attempt an examination of the demand with a view to decline reference and courts will always be vigilant whenever the Government attempts to usurp the powers of the Tribunal for adjudication of valid disputes. To allow the Government to do so would be to render Section 10 and Section 12(5) of the Industrial Disputes Act nugatory."

It cannot be said that the demand in the present case is either perverse or frivolous. The law is very well settled since then that the State Government has to refer the dispute for adjudication unless it finds that the demands are perverse or frivolous and do not merit reference. And it is also well settled that the Government can be issued a Writ of mandamus under Article 226 to refer the industrial dispute for adjudication.

8. The appropriate Government respondents. Nos. 1 and 3, are therefore, directed under Article 226 of the Constitution of India to refer the industrial dispute in the demand letter dated 3-8-1992 for adjudication to the appropriate industrial tribunal within a period of eight weeks from today. Rule is made absolute. No orders as to costs.