Bombay High Court
Indorama Synthetics (I) Ltd., ... vs Dushyantkuma N. Sandhya & 11 Ors on 5 October, 2016
Bench: Ravi K. Deshpande
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH, NAGPUR
WRIT PETITION NO.1939 OF 2008
Indorama Synthetics (I) Ltd.,
A-31, MIDC Industrial Area,
Butibori, District Nagpur,
through its Vice President (HR). ... Petitioner
Versus
1. Dushyantkumar N. Sandhya,
Aged Major,
R/o Indo Rama Workers Colony,
A-31, Indo Rama Synthetics (I) Limited,
MIDC Industrial Area, Butibori,
Nagpur.
2. Dilip Tukaramji Satnurkar,
Aged Major,
R/o Trimurti Nagar,
Nagpur.
3. Vishnu Punjaramji Kolhe,
Aged Major,
R/o Hingna Kasba, Hinga,
District Nagpur.
*4. Sharad Harishrao Sahare,
Aged Major,
R/o Bezangag, Nagpuyr-04.
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*5. Sanjay Shalikrao Dakhare,
Aged Major,
R/o Butibori, Nagpur.
6. Fiyaz Ahmad Mohammad Noor,
Aged Major,
R/o Lakadganj, Kamptee,
Nagpur.
7. Dilip Prabhakarrao Tambe,
Aged Major,
R/o K-12, Laxmi Nagar,
Nagpur.
8. Rammohan Babansingh Chandel,
Aged Major,
R/o Butibori,
District Nagpur.
*9. Sanjay Yashwantrao Bhoyar,
Aged Major,
R/o New Nandanwan,
Nagpur.
10. Shiv Kumar Singh,
Aged Major,
R/o Indo Rama Workers Colony,
A-31, Indo Rama Synthetics (I) Limited,
MIDC Industrial Area,
Butibori, Nagpur.
11. Member, Industrial Court,
Nagpur,
Temple Road, Civil Lines,
Nagpur.
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12. Judge, First Labour Court,
Nagpur,
Temple Road, Civil Lines,
Nagpur. ... Respondents
[ * Names of Respondent Nos.4, 5 and 9 are deleted as per Hon'ble
Court's Order dated 8-12-2009]
Shri R.B. Puranik, Advocate for Petitioner.
Shri N.S. Autkar, Advocate, holding for Smt. B.H. Dangre, Advocate for
Respondent Nos.1 to 3, 6, 7, 8 and 10.
CORAM : R.K. DESHPANDE, J.
DATE OF RESERVING THE JUDGMENT : 30-9-2016
DATE OF PRONOUNCING THE JUDGMENT : 5-10-2016
JUDGMENT :
1. In Application, bearing B.I.R. Case No.22 of 1998, filed by
the ten employees of the petitioner-Company in the Labour Court on
2-12-1998, the provisions of Section 42 read with Items 1, 2, 4 and 5
under Schedule II of the Bombay Industrial Relations Act, 1946 were
invoked alleging their transfer from Polyester Department to
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Spurn Yarn Department amounted to "illegal change", as defined
under sub-section (15) of Section 3 of the Bombay Industrial
Relations Act. The Labour Court, by its judgment and order
dated 5-12-2006, allowed the said application and passed an order,
the operative portion of which, is reproduced below :
"1.
The application filed by the applicants is allowed.
2. The nonapplicant is directed to give original work to
the applicants in the Polyester utility department and give
all consequential benefits from the date of illegal change
made by the nonapplicant i.e. 2.10.98.
3. No order as to cost."
The Industrial Court dismissed Appeal (BIR) No.1 of 2007 by its
judgment and order dated 9-4-2008. Hence, the employer is before
this Court in this petition.
2. On 17-1-2008, this petition was admitted, granting interim
relief in terms of prayer clause (iii) of the petition, staying the
judgments and orders passed by both the Courts below.
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3. The basic question before the Courts below was whether the
employees were working in the Polyester Department, engaged in
the activities of manufacturing of polyester fibres, such as PSF, POY
and Polyester Chips, or were working in the Utility Department,
providing services of water supply, repairs and maintenance of
refrigeration, air-conditioning and humidification to various
Production Departments, like Polyester Department, Spurn Yarn
Department, and Drought Texturized Yarn (DTY) Manufacturing
Department. The case of the employees was that they were working
in the Polyester Department, whereas, according to the employer,
they were working in the Utility Department. The transfer of
employees to Spurn Yarn Department in the month of October 1998
was not disputed. The another question involved was whether by
such transfer there was reduction in the number of employees
working in the Polyester Department and increase in the number of
employees in the Spurn Yarn Department by way of rationalisation,
adversely affecting the incentives and privileges,
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attracting the provisions of Items 1, 2, 4 and 7 under Schedule II,
requiring a notice of change to be given under Section 42 of the
Bombay Industrial Relations Act. The employer raised a plea before
the Courts below that as a result of acceptance of the Scheme of De-
merger under Sections 390 and 394 of the Companies Act, 1956 by
the Delhi High Court and the Madhya Pradesh High Court, the Spurn
Yarn Department was transferred to newly formed Company, viz.
Indorama Textile Ltd., with effect from 1-4-2002, and the said
Company not having been joined as the party-respondent in the
proceedings, the employees are not entitled to any relief against the
present employer.
4. The Courts below have taken a view that the employees
were working in the Utility Department, which was not involved in
the functioning of production, but the wages of the employees were
drawn or debited to the activities of Polyester Department, and hence
the employees were working in the Polyester Utility Department.
The Labour Court has held that the transfer of
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employees to Spurn Yarn Department attracts Items 1, 2 and 4 of
Schedule II of the Bombay Industrial Relations Act, as it amounted
to illegal change of reduction in the strength of employees in the
Polyester Department and increase in the strength of employees in
the Spurn Yarn Department in violation of sub-section (1) of
Section 42 of the Bombay Industrial Relations Act, whereas the
Industrial Court holds that the illegal change attracts Items 1, 2, 7
and 9 of Schedule II. The Courts below have held that after the
transfer, the wages of the employees were debited in the account of
Spurn Yarn Department. The transfer of employees has resulted in
causing reduction in privileges, concessions in the matter of
promotions, increments and wages. On the aspect of de-merger, the
Labour Court holds that there was no change in the conditions of
service of the employees upon de-merger, whereas the Industrial
Court holds that the position prevailing in the month of
October 1998 has to be considered and, therefore, the event of
de-merger is of no consequence.
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5. In para 12 of the judgment of the Labour Court, a finding is
recorded that the employees were appointed and confirmed in the
Utility Department, and the Industrial Court records a finding in
para 23 of its judgment that the employees were not working in the
Polyester Department. According to Shri Puranik, the learned
counsel for the petitioner-employer, such findings of the Courts
below are based upon the orders of appointment, the letters of
confirmation, the identity cards, and the oral evidence of witness
Dushyankumar Sanadhya, examined by the employees, and witness
Rajesh Nayak, examined by the employer. He submits that in the
absence of there being any separate Department, like Polyester
Utility Department, the Courts below have committed an error in
holding that the employees were working in such Department. He
further submits that merely because the wages payable to the
employees were debited in the account of Polyester Department,
would not mean that the employees were appointed in the Polyester
Department.
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6. Shri Puranik has invited my attention to the provision of
Item 2 under Schedule III of the Bombay Industrial Relations Act,
dealing with assignment of work and transfer of workers within the
establishment and submits that at the most, the transfer in question
would attract such Item, and being an inter-departmental transfer,
would not attract the provision of sub-section (1) of Section 42 of the
said Act so as to require the notice of change to be given to the
employees. He has relied upon the decision of the Apex Court in the
case of Ashok K. Jha and others v. Garden Silk Mills Limited and
another, reported in (2009) 10 SCC 584.
7. Shri Puranik further submits that necessary facts leading to
attract the Items under Schedule II of the said Act have neither been
pleaded nor the evidence has been led to make out a case requiring
the notice of change to be given, as required by sub-section (1) of
Section 42 of the said Act. He submits that at any rate, in view of
the subsequent change in accepting the Scheme by the two High
Courts, the employees are not entitled to be taken back
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in service, as they have become the employees of another Company,
viz. Indorama Textile Ltd. According to him, the relief granted by
the Labour Court has become infructuous and cannot be
implemented.
8. Shri Autkar, the learned counsel for the
respondent-employees, has solely relied upon the findings recorded
by both the Courts below and urged that all the contentions raised by
Shri Puranik, the learned counsel for the petitioner-employer, have
been dealt with, and in recording the concurrent findings of fact,
there is no perversity or illegality committed by the Courts below,
requiring interference in exercise of extra ordinary writ jurisdiction
by this Court.
9. The undisputed factual position available on records needs
to be considered first. The establishment of the petitioner-Company
consisted of three Production Departments - (i) Polyester
Department, engaged in the manufacturing of polyester fibres - PSF,
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POY and Polyester Chips, (ii) Drought Texturized Yarn (DTY)
Manufacturing Department, and (iii) Spurn Yarn Department,
manufacturing synthetic yarn. Apart from these three Production
Departments, there were other supporting Departments, such as
Utility Department, Administrative Department, Finance
Department, etc. The function of the Utility Department is to provide
water, humidification, repairs and maintenance of refrigeration and
air conditioning, etc. to the aforesaid three Production Departments.
The Spurn Yarn Department was situated on the eastern side,
whereas the Polyester and DTY Departments were situated on the
western side. The administrative office of the Utility Department
was situated on the western side near the Polyester Department. All
the employees in the Utility Department were required to enter the
premises of the Company through Gate No.3 to mark their
attendance by punching their cards prior to October 1998.
Thereafter, the applicant-employees were asked to enter the premises
of the factory through Gate No.2 along with the employees working
in the Spurn Yarn Department. This has given a rise to filing of an
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application under Sections 78 and 79 of the Bombay Industrial
Relations Act before the Labour Court, out of which the present
petition arises. The application was filed by the ten employees, who
were appointed during the period from 9-10-1993 to 2-9-1996 on the
posts of Technical Assistant, Assistant Filter, and Assistant
Operator/Filter.
10. Before proceeding to consider the findings recorded by the
Courts below, certain provisions of the Bombay Industrial Relations
Act need to be considered. Section 42 of the said Act deals with the
notice of change, and sub-sections (1), (2) and (4) therein being
relevant, are reproduced below :
"42. Notice of change
(1) Any employer intending to effect any change in
respect of an industrial matter specified in Schedule II
shall give notice of such intention in the prescribed form
to the representative of employees. He shall send a copy
of such notice to the Chief Conciliator, the Conciliator
for the industry concerned for the local area, the
Registrar, the Labour Officer and such other person as
may be prescribed. He shall also affix copy of such
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notice at a conspicuous place on the premises where the
employees affected by the change are employed for work
and at such other place as may be directed by the Chief
Conciliator in any particular case.
(2) Any employee desiring a change in respect of an
industrial matter not specified in Schedule I or III give a
notice in the prescribed form to the employer through
the representatives of employees, who shall forward a
copy of the notice to the Chief Conciliator, the
Conciliator for the industry concerned for the local area,
the Registrar, the Labour Officer and such other person
as may be prescribed.
(4) Any employee or a representative union desiring a
change in respect of (i) any order passed by the
employer under standing orders, or (ii) any industrial
matter arising out of the application or interpretation of
standing orders, or (iii) an industrial matter specified in
Schedule III, except item (5) thereof shall make an
application to the Labour Court and as respects change
desired in any industrial matter specified in item 5 of
Schedule III, to the Industrial Court."
In terms of the aforesaid provision, any employer intending to effect
any change in respect of the industrial matter specified in
Schedule II has to give a notice of such intention in the prescribed
form to the representative of employees. In terms of sub-section (4)
of Section 42, any employee or a representative union desiring a
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change in respect of an industrial matter specified in Schedule III,
has to make an application to the Labour Court.
11. Schedule II under Section 42, consisting of Items 1 to 11,
being relevant, is reproduced below :
ig "SCHEDULE II
(Section 42)
1. Reduction intended to be of permanent or
semi-permanent character in the number of persons
employed or to be employed in any occupation or process
of department or departments or in a shift not due to force
majeure.
2. Permanent or semi-permanent increase in the number
of persons employed or to be employed in any occupation
or process or department or departments.
3. Dismissal of any employee except as provided for in
the standing orders applicable under this Act.
4. Rationalisation or other efficiency system of work,
whether by way of experiment or otherwise.
5. All matters pertaining to shift working which are not
covered by the Standing Orders applicable under this Act.
6. Withdrawal of recognition to unions of employees.
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7. Withdrawal of any customary concession or privilege
or change in usage.
8. Introduction of new rules of discipline or alteration or
existing rules and their interpretation, except in so far as
they are provided for in the standing orders applicable
under this Act.
9. Wages including the period and mode of payment.
10. Hours of work and rest intervals.
11. All matters pertaining to leave and holidays, other
than those specified in items 6 and 7 in Schedule I."
Sub-section (4) of Section 46 of the Bombay Industrial Relations Act
provides that no employer shall make any change in any industrial
matters mentioned in Schedule II before giving notice of change, as
required by the provision of sub-section (1) of Section 42 and any
change made in contravention of the provisions of sub-sections (1),
(2) or (3) shall be illegal.
12. The mandatory nature of the provision of sub-section (1)
of Section 42 of the Bombay Industrial Relations Act is apparent, as
sub-section (4) of Section 46 provides the consequences of the
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violation of sub-section (1) of Section 42 to declare the change as
illegal. The operation of sub-section (1) of Section 42 is, however,
restricted to the items specified in Schedule II. If the case is not
covered by any one or more items specified in Schedule II, but is
covered by any of the items specified in Schedule I or III, then the
provision of sub-section (1) of Section 42 is not attracted, and such
an intention of the legislature is clear from the language employed
under sub-section (2) of Section 42 of the said Act.
13. The question of assignment of work and transfer of
workers within the establishment is governed by Item 2 under
Schedule III of the Bombay Industrial Relations Act, which is
reproduced below.
"SCHEDULE III
(Section 42)
(2) Assignment of work and transfer of workers within
the establishment."
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In the decision of the Apex Court in case of Ashok K. Jha and others
v. Garden Silk Mills Limited and another, reported in
(2009) 10 SCC 584, the question considered was whether the
transfer of employees from one Department to another within the
same establishment and assignment of work to them attracts Items 1
and 2 of Schedule II of the Bombay Industrial Relations Act, was
considered. The view taken by the Industrial Court that the transfer
of employees from one Department to another in the same
establishment would be a change under Items 1 and 2 of Schedule II
of the said Act in the absence of there being a counter-exchange of
work between such two Departments was set aside by the Division
Bench of the High Court and the same was confirmed by the Apex
Court.
14. In paras 21 and 22 of the said decision, the Apex Court
has held as under :
"21. A close look at Items 1 and 2 of Schedule II
and Item 2 of Schedule III would show that insofar as
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assignment of work and transfer of workers within the
establishment is concerned, the subject is precisely and
specifically covered by Item 2 of Schedule III. The
expression "assignment of work and transfer of workers
within the establishment" is plain and admits of no
ambiguity. If the orders of transfer are of the description
mentioned in Item 2 of Schedule III, Item 2 of Schedule III
must come into full play. Items 1 and 2 of Schedule II
operate altogether in a different field.
22. Basically, Items 1 and 2 of Schedule II deal
with reduction in the number of persons employed or to be
employed in any occupation or process or department or
departments or in a shift or permanent or semi-permanent
increase in the number of persons employed or to be
employed in any occupation or process or department or
departments. A mere transfer of workers within the
establishment would not attract Item 1 and 2 of
Schedule II but would be covered by Item 2 of Schedule III
as there is a specific item in this regard. A specific item
would exclude the items of general character and, in that
view of the matter, in the matters of transfer of workers
within the establishment and assignment of work by the
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employer, the specific Item 2 of Schedule III is attracted".
It is thus apparent that the Apex Court has made a distinction
between Items 1 and 2 of Schedule II dealing with the reduction in
the number of persons employed or to be employed in any
occupation or process or Department or Departments and the transfer
of workers within the establishment under Item 2 of Schedule III. It
has been held that mere transfer of workers within the establishment
would not attract Items 1 and 2 of Schedule II, but it would be
covered by Item 2 of Schedule III, which is a specific item in this
regard. It is held that the specific item would exclude the items of
general character and therefore, in the matter of transfer of workers
within the establishment and assignment of work by the employer,
the specific Item 2 of Schedule III is attracted. Apart from this, in
my view, the reduction in the number of persons in one Department
and increase in the number of persons in another Department as a
result of inter-departmental transfer by itself would not be covered
by Items 1 and 2 in Schedule II of the Bombay Industrial Relations
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Act, unless it is shown that any one or more other item in Schedule II
are attracted.
15. Once the Labour Court records a finding in para 12 of its
judgment that the employees were appointed and confirmed in the
Utility Department and the Industrial Court records a finding in
para 23 of its judgment that the employees were not working in the
Polyester Department, I have no hesitation to accept the contention
of Shri Puranik that in the absence of there being any separate
Department, like "Polyester Utility Department", the Courts below
have committed an error in holding that the employees were working
in such Department. Even if it is assumed on the basis of cost code
debiting the salary of the employees in the Utility Department to the
Polyester Department that such employees were given jobs to be
performed in the Polyester Department, the assignment of work in
the Spurn Yarn Department from the month of October 1998 or the
transfer of such employees for the purposes of job in the Spurn Yarn
Department would attract Item 2 in Schedule III, which would not
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attract the provision of sub-section (1) of Section 42 of the Bombay
Industrial Relations Act, requiring a notice of change to be given,
and such a change cannot be said to be an "illegal change", as
contemplated by sub-section (4) of Section 46 of the said Act.
16. It is not the case that the transfer of the employees from
one Department to another in the same establishment was not a
condition of service. There is absolutely no evidence on record to
suggest what were the concessions, privileges or benefits enjoyed by
the employees in the Utility Department, which have been reduced or
changed by their transfer in the Spurn Yarn Department.
Shri Dushyantkumar Sanadhya, the only witness examined by the
employees, has stated in his cross-examination as under :
"... After October 1998 my salary was reduced upto
Rs.500/-. I have filed pay slip of October 1998 it is at
Ex.39. I have not filed the pay slip of November 1998
and onwards. I told to my Counsel that after
October 1998 my salary was reduced up to Rs.500/-. I
was explained the contents of the complaint by my
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counsel before making signature. I cannot assign any
reason why not mentioned in my complaint that my salary
was reduced by Rs.500/-. I know that in the month of
April 97, there was agreement and elected
representatives. It is true that as per agreement basic pay
and other allowances were fixed. It is true that Oct.98
basic pay, special pay, washing allowance, medical
allowance, attendance allowance were not reduced. It is
true that the production incentive is depending upon the
production. It is not true to say that there were no
changes in service conditions after Oct.98."
In the pleadings, there is no basis for leading the aforesaid evidence.
The reduction in production incentives depends upon the production,
and it cannot be said that there was reduction in the wages paid to the
employees.
17. In the additional affidavit filed before this Court by the
employees, the employees have stated in para 2 as under :
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"2. ... It is most respectfully stated that there is
change in conditions of service and the change continued
since the date of their transfer and is continuing till date. It
is to be noted that the agreement executed between Indo
Rama Synthetics (I) Ltd. and the representatives of
employees of Indo Rama Synthetics Ltd. which includes
agreement on several points including medical allowance,
washing allowance, production incentive etc. The
agreement clearly reveals that the production incentive
applicable to the employees on 01/01/1999 would be
different from polyester DTY cum spinning. It was agreed
by the said agreement that promotion policy would not
differ. The production incentive which was to be dependent
on production in particular unit namely Polyester DTY and
Spinning. However, in the month of October, November,
December, 1998 a production incentive of Rs.450/- was
agreed to all employees of three units. However, from
Jan, 1999 it was agreed that production incentive would
vary from department to department. A copy of the said
agreement executed between the petitioner and the
representatives of the employees is marked and annexed
hereto as Annexure-R1. It is relevant to note that
agreements were executed between the petitioner company
and the presentatives of the employees from time to time
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and the agreement executed for Spinning unit for
2005-2007 is marked and annexed hereto as
Annexure-R2 and the agreement for the period 2008-2010
is marked and annexed hereto as Annexure-R2(i). As
against the agreement executed between the petitioner
company and its employees in Polyester department for
2005-2007 is marked and annexed hereto as Annexure-R3
and for the period of 2008-2010 is marked and annexed
hereto as Annexure-R3(i). ..."
The employees are talking about the incentives made applicable from
1-1-1999, whereas the application before the Labour Court was filed
in the month of December 1998. The employees have entered into
the settlement and the aforesaid averment is the outcome of such
settlement between the employer and the representative-Union. The
same is of no consequence for determination of reduction in the
concessions, privileges or benefits available to the employees prior to
their alleged transfer.
18. Once it is held that the assignment of work and transfer of
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employees is covered by Item 2 of Schedule III under the Bombay
Industrial Relations Act, the question of attracting the provisions of
Items 1 and 2 of Schedule II under the said Act does not at all arise
and it has to be held that there was no necessity to issue a notice of
change, as required by sub-section (1) of Section 42 of the said Act.
The Scheme of De-merger under Sections 390 and 394 of the
Companies Act, 1956 has already been approved by the Court of
competent jurisdiction and the Spurn Yarn Department in which the
employees were working has been transferred to the newly formed
Company, viz. Indorama Textile Ltd., with effect on 1-4-2002. The
Courts below have recorded the finding that such action was not the
subject-matter of challenge and that there was no change in the
conditions of service of the employees upon transfer to Indorama
Textile Ltd. The said Company was not joined as the
party-respondent in the application under Sections 78 and 79 of the
Bombay Industrial Relations Act and, therefore, it is not possible to
permit the implementation of the decision of the Labour Court
directing the petitioner to give original work to the employees in the
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Polyester Utility Department along with all consequential benefits.
The Courts below have adopted misdirected approach to the
controversy involved in the case. The judgments and orders passed
by the Courts below cannot, therefore, be sustained.
19. In the result, the petition is allowed. The judgments and
orders dated 5-12-2006 passed by the Labour Court in Application,
bearing B.I.R. Case No.22 of 1998; and dated 9-4-2008 passed by the
Industrial Court in Appeal (BIR) No.1 of 2007, are hereby quashed
and set aside. Application, bearing B.I.R. Case No.22 of 1998, filed
by the respondent-employees is dismissed.
20. Rule is made absolute in above terms. No order as to costs.
JUDGE.
Lanjewar
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CERTIFICATE
"I certify that this Judgment uploaded is a true and correct
copy of original signed Judgment."
Uploaded by : P.D. Lanjewar, PS
Uploaded on : 5-10-2016
