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Saturday, September 21, 2013

Industrial dispute = The Industrial Tribunal/ Labour Court constituted under the Industrial Disputes Act is a creature of that statute. It acquires jurisdiction on the basis of reference made to it. The Tribunal has to confine itself within the scope of the subject matter of reference and cannot travel beyond the same. This is the view taken by this Court in number of cases including in the case of National Engineering Industries Limited v. State of Rajasthan & Ors. 2000 (1) SCC 371. 19. It is for this reason that it becomes the bounden duty of the appropriate Government to make the reference appropriately which is reflective of the real/ exact nature of “dispute” between the parties. In the instant case, the bone of contention is as to whether the respondent workmen were simply transferred by the appellant to M/s. Lafarge or their services were taken over by M/s. Lafarge and they became the employees of the M/s. Lafarge. Second incidental question which would follow therefrom would be as to whether they have right to join back the services with the appellant in case their service conditions including salary etc. which they were enjoying with the appellant are not given or protected by M/s. Lafarge? If it is proved that their service conditions are violated, another question would be as to whether they can claim the service benefits/ protection from M/s. Lafarge or they have the right to go back to the appellant?= It follows from the above that the reference in the present form is clearly defective as it does not take care of the correct and precise nature of the dispute between the parties. On the contrary, the manner in which the reference is worded shows that it has already been decided that the respondent workmen continue to be the employees of the appellant and further that their services were simply transferred to M/s. Lafarge. This shall preclude the appellant to put forth and prove its case as it would deter the labour court to go into those issues. It also implies that by presuming so, the appropriate Government has itself decided those contentious issues and assumed the role of an adjudicator which is, otherwise, reserved for the Labour Court/ Industrial Tribunal. 21. As a consequence, this appeal is allowed and the impugned judgment of the High Court is set aside. Sequitur to that would be to quash the references made in the present form. However, at the same time, direction is given to the appropriate Government to make fresh reference, incorporating real essence of the dispute as discussed in this judgment, within a period of two months from the date of receipt of the copy of this judgment.

       published in http://judis.nic.in/supremecourt/imgst.aspx?filename=40776
                                 [REPORTABLE]

                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL NO. 8246 OF 2013
      (Arising out of Special Leave Petition (Civil) No. 20494 of 2011)
      M/s. Tata Iron & Steel Co. Ltd.
      …….Appellant(s)

                                   Versus

      State of Jharkhand & Ors.                              ……Respondent(s)

      WITH

      C.A. No. 8247/2013
      (@ SLP(C) No. 21086 of 2011)



                               J U D G M E N T

      A.K. SIKRI, J.

      1.    Leave granted.

      2.    We heard the Counsel for the parties at length. Having regard to
      the nature of issue involved that needs to be answered by us, it would
      be enough to to take note of some admitted facts,  eschewing  detailed
      factual discussion which may unnecessarily burden this judgment.

      3.    The appellant before us  is  M/s.  Tata  Iron  &  Steel  Company
      Limited (rechristened as Tata Steel Ltd.).  Apart  from  manufacturing
      steel, its core business, the  appellant  company  was  having  cement
      division as well. In the era of globalization, liberalization and also
      because of economic compulsions, the appellant decided to  follow  the
      policy of disinvestment. Persuaded by these considerations it sold its
      cement division to Lafarge India Pvt. Ltd (hereinafter to be  referred
      as ‘M/s.  Lafarge’)  vide  Business  Transfer  Agreement  (BTA)  dated
      9.3.1999 which was to be effected  from  1.11.1999.   This  agreement,
      inter alia provided that M/s. Lafarge  would  take  over  the  company
      personnel, including, in terms of Section  25  FF  of  the  Industrial
      Disputes Act, 1947. It was on the condition that:

           (a)    The services of the company personnel  shall  not  be  or
                 deemed to be interrupted by such transfer.

           (b)   The terms and conditions  of  service  applicable  to  the
                 company personnel after such transfer are not  in  any  way
                 less  favourable  to  the  company  personnel  than   those
                 applicable to them immediately before the transfer.

           (c)   The purchaser is, under  the  terms  of  transfer  herein,
                 legally liable to pay to the company personnel in the event
                 of their  retrenchment,  compensation  on  the  basis  that
                 services have been continued and have not been  interrupted
                 by the transfer of business.




      4.    This decision to hive off and transfer the  cement  division  by
      the appellant to M/s Lafarge was communicated to the employees of  the
      cement division as well. According to the appellant,  consequent  upon
      this agreement, with the transfer of business, the  employees  working
      in the cement division were also taken  over  by  M/s  Lafarge  &  M/s
      Lafarge issued them fresh  letters  of  appointments.  These  included
      Respondent Nos. 8-82 herein who started working with M/s Lafarge.

      5.    It appears that  these  workers  were  not  satisfied  with  the
      working conditions in M/s. Lafarge.  They  submitted  a  statement  of
      demand to the appellant on 15.9.2003, stating  inter  alia  that  they
      were directed to work with M/s. Lafarge without taking their  consent.
      As per these respondents/ employees, impression given to them was that
      they would work in different departments in M/s. Lafarge for some days
      for smooth functioning of that establishment, which was a part of  the
      appellant organization and thereafter they would be posted back to the
      parent department. They had obeyed these orders  faithfully  believing
      in the said representation. However, the concerned employees were  not
      given all the benefits by M/s Lafarge  which  they  were  enjoying  in
      their parent department. Thus, the demand was made to take  them  back
      with the appellant company. The company did not pay any heed  to  this
      demand. These employees approached  the  Deputy  Labour  Commissioner,
      Jamshedpur, raising their grievances and  requesting  to  resolve  the
      dispute.

      6.    Notices were issued to  the  appellant  to  participate  in  the
      Conciliation Proceedings. The appellant appeared  and  took  the  plea
      that on and from 1.11.1999, the  cement  division  was  sold  to  M/s.
      Lafarge and these workmen had become the employees of M/s. Lafarge. It
      was also stated that fresh appointment letters issued by M/s.  Lafarge
      and they ceased to  be  the  employees  of  the  appellant.  Since  no
      amicable settlement could  take  place  and  conciliation  proceedings
      resulted in failure.  The  failure  report  was  sent  by  the  Labour
      Department to the  Government  of  Jharkhand  which  resulted  in  two
      reference orders, thereby referring the disputes between  the  parties
      to the Labour Court, Jamshedpur, for  adjudication.  The  dispute  was
      referred under Section 10(1) of the Industrial Dispute Act, 1947  with
      following terms and reference.

           “Whether not to take back Shri  K.  Chandrashekhar  Rao  and  73
           other workmen (list enclosed) of M/s TISCO  Limited,  Jamshedpur
           in service by their own TISCO Management after their transfer to
           M/s. Lafarge India Limited, is justified?  If  not  what  relief
           they are entitled to?”

                 Other reference was also worded identically.

      7.    According to the appellant, the manner in which  the  references
      are worded, do not depict the true nature of the dispute  between  the
      parties. It was their submission that the concerned  workmen  were  no
      longer in their employment and, therefore, could not have  raised  the
      grievance or any dispute against the appellant company  and  thus,  no
      industrial dispute at  all  existed  between  the  appellant  and  the
      respondent workmen. They took a specific plea that if M/s. Lafarge did
      not provide assured service terms, these respondents could  raise  the
      dispute only against M/s. Lafarge which was their  real  employer  and
      M/s. Lafarge was not even made partial in the present proceedings.  As
      per  the  appellant,  the  Conciliation  Officer  had  not  considered
      material on record and without applying its mind submitted the failure
      report leading to the reference  in  question.  On  that  basis,  Writ
      Petitions were filed  by  the  appellant  before  the  High  Court  of
      Jharkhand at Ranchi seeking quashing of the said reference.

      8.    These Writ Petitions came up before the learned Single Judge who
      dismissed these Writ Petitions with the observation  that  the  Labour
      Court, which was already in  seisin  of  the  matter,  can  very  well
      adjudicate and answer the reference after considering all  the  points
      raised by the parties and on the basis of evidence led by the  parties
      in the reference proceeding  before  the  Labour  Court.  Intra  Court
      Appeals preferred by the appellant have been dismissed by the Division
      Bench of the said Court observing that as there is a  dispute  between
      parties and, therefore, the learned Single Judge rightly dismissed the
      Writ Petitions.

      9.    It is how the parties are before us in the present proceedings.

      10.   At the outset, we would like to observe that the High  Court  is
      right in holding that the Industrial Dispute has  arisen  between  the
      parties in as much as the contention of the workers is that  they  are
      entitled to serve the appellant as they continued to be the workers of
      the appellant and were wrongly “transferred” to M/s. Lafarge.  On  the
      other hand, the appellant contends that with the hiving off the cement
      division and transferring the same to  M/s.  Lafarge  along  with  the
      workers who  gave  their  consent  to  become  the  employees  of  the
      transferee company, the relationship of employers and employees ceased
      to exist and, therefore, the workmen have no right to come back to the
      appellant. This obviously is  the  “dispute”  within  the  meaning  of
      Section 2(k) of the Industrial Disputes Act.  Section  2  (k)  of  the
      Industrial Disputes Act which  defines  Industrial  Dispute  reads  as
      under:

           “2(k) “industrial  dispute”  means  any  dispute  or  difference
                 between employers  and  employers,  between  employers  and
                 workmen, or between workmen and workmen, which is connected
                 with the employment  or  non-employment  or  the  terms  of
                 employment  or  with  the  conditions  of  labour,  of  any
                 person.”




      11.   No doubt, as per the aforesaid provision, industrial dispute has
      to be between the employer and its workmen.  Here,  the  appellant  is
      denying the  respondents  to  be  its  workmen.  On  the  other  hand,
      respondents are asserting that they continue to be  the  employees  of
      the appellant company. This itself would be a “dispute” which  has  to
      be  determined  by  means  of  adjudication.  Once  these   respective
      contentions were raised before  the  Labour  Department,  it  was  not
      within the powers of the  Labour  Department/  appropriate  Government
      decide this dispute and assume the adjudicatory role as  its  role  is
      confined to discharge administrative function of referring the  matter
      to the Labour Court/ Industrial Tribunal.  Therefore,  this  facet  of
      dispute also needs to be adjudicated upon  by  the  Labour  Court.  It
      cannot, therefore, be said that no dispute exists between the parties.
      Of course, in a  dispute  like  this,  M/s.  Lafarge  also  becomes  a
      necessary party.

      12.   Having said so,  we  are  of  the  opinion  that  the  terms  of
      reference are not appropriately worded in as much as  these  terms  of
      reference do not reflect the real dispute  between  the  parties.  The
      reference pre-supposes that the respondents workmen are the  employees
      of the appellant. The reference also proceeds on the  foundation  that
      their services have been “transferred”  to  M/s.  Lafarge.   On  these
      suppositions the limited scope of adjudication is confined  to  decide
      as to whether appellant is under an  obligation  to  take  back  these
      workmen in service. Obviously, it is not the reflective  of  the  real
      dispute between the parties. It not only depicts the  version  of  the
      respondents workmen, but in fact accepts the same viz.  they  are  the
      employees of the appellant and mandates the Labour  Court/  Industrial
      Tribunal to only decide as to whether the  appellant  is  required  to
      take them back in its fold. On the contrary, as pointed out above, the
      case set up by the appellant is that it was not the case  of  transfer
      of the workmen to M/s Lafarge but their services were  taken  over  by
      M/s. Lafarge  which is a different company/ entity altogether. As  per
      the appellant they were issued fresh appointment letters  by  the  new
      employer  and  the  relationship  of  employer-employee  between   the
      appellant and the workmen stood snapped. This version of the appellant
      goes to the root of the matter.   Not only it is not included  in  the
      reference, the appellant’s right to  put  it  as  its  defence,  as  a
      demurrer, is altogether  shut  and  taken  away,  in  the  manner  the
      references are worded.

      13.   We would hasten to add that,  though  the  jurisdiction  of  the
      Tribunal is confined to the terms of reference, but at the  same  time
      it is empowered to go into the incidental issues.  Had  the  reference
      been appropriately  worded,  as  discussed  later  in  this  judgment,
      probably it was still open to the appellant to contend and prove  that
      the Respondent workmen ceased to  be  their  employees.  However,  the
      reference in the present form  does  not  leave  that  scope  for  the
      appellant at all.

      14.   A full Bench of High Court  of  Delhi  in  the  case  of  Indian
      Tourism Development Corporation (ITDC)  v.  Delhi  Administration  and
      Ors. 1982 (LAB) IC 1309 had an occasion to deal  with  issue  of  this
      nature i.e. pertaining to the  “Terms  of  Reference”.   Various  writ
      petitions were heard together and disposed of by the common  judgment.
      One of the writ petitions, in which this issue arose,  was  C.W.P  No.
      1472/1981. One worker working at the sweets counter of the  Sona  Rupa
      Restaurant  of  the   management   was   caught   red   handed   while
      misappropriating the sale proceeds of sweets sold  to  the  customers.
      Though initially he admitted the theft but later he  instigated  other
      employees to resort to militant and  violent  acts  in  which  various
      workers indulged in and abstained from work. In view  of  the  violent
      and subversive activities of the workers, the  management  decided  to
      close down  the  restaurant  and  informed  the  workmen  accordingly.
      Notice of closure was issued wherein workmen were informed that  there
      accounts would be settled in full and final.  The  workmen  approached
      the Labour Department and raised the dispute alleging that there was a
      “lock-out” declared by the management. The management appeared in  the
      conciliation proceedings and stated that it was a case of “closure” of
      the restaurant and not of  lock-out.  Since  conciliation  proceedings
      failed, the matter was referred by the appropriate Government  to  the
      Industrial Tribunal, Delhi, for adjudication with following  terms  of
      reference:

           “Whether the workmen as shown in Annexure ‘A’  are  entitled  to
           wages for a period of lock-out w.e.f. 1.1.81  and  if  so,  what
           directs are necessary in this respect.”




      15.   The  Management  filed  the  Writ  Petition  under  Article  226
      challenging the notification of reference on the plea  that  the  real
      dispute about the existence or otherwise of the lockout had  not  been
      referred to.  Instead lock- out was presumed in the  reference  itself
      on imaginating and fictitious basis with the result, it was  not  open
      to the management to urge before the Tribunal whether there was at all
      a lock out, and instead it was a case of closure, prompted by workers’
      violent attitude. The High Court accepted  these  contentions  on  the
      analogy that the jurisdiction of the  Court/  Industrial  Tribunal  in
      industrial disputes is limited to the points specifically referred for
      its adjudication and the matters incidental  thereto  and  it  is  not
      permissible for it to go beyond the terms of reference. The High Court
      further pointed out that though the existence of lock-out  itself  was
      the real dispute between the management and its workmen, the terms  of
      reference proceeded on  the  assumption  that  there  was  a  lock-out
      declared by the management. This way the management was precluded from
      proving before the Industrial Tribunal that there was no lock out and,
      in fact it was a case of closure. Thus, the real dispute  between  the
      parties as to whether there was at all a lock-out or whether there was
      violence by the workmen which compelled the management  to  close  the
      restaurant, was not referred.

      16.   Later this judgment was followed by a Single Bench of Delhi High
      Court in the  case  of  Moolchand  Kharati  Ram  Hospital  vs.  Labour
      Commissioner and Ors. 1998 (III) LLJ 1139 Del, where also dispute  was
      as to whether the workmen had resorted to strike, as contended by  the
      management or it is the management  which  had  declared  a  lock-out,
      which was the stand of the workmen. However, the  terms  of  reference
      stipulated were: whether the workmen were entitled to  wages  for  the
      lock-out period? The Court concluded that since there  was  a  dispute
      about the existence of lock-out itself, this kind of  reference  would
      not permit the management to prove that it  was  in  fact  a  case  of
      “strike”  resorted  to  by  the  workmen.  Reference  was  accordingly
      quashed. The court relied upon the full Bench judgment in ITDC(supra).
        Some  judgments  of  this  Court  were  also  referred  to  for  the
      proposition that the jurisdiction of the Tribunal is  limited  to  the
      extent of what is referred to it. We  would  like  to  reproduce  that
      portion of the judgment where decisions of this Court are discussed:-


           “25.  Their Lordship of the  Supreme  Court  in  the  matter  of
                 Management of Express Newspapers (Private) Ltd., Madras  v.
                 The Workers and  Ors.,MANU/SC/0267/1962:  (1962)IILLJ227SC,
                 held  that  "since  the  jurisdiction  of  the   Industrial
                 Tribunal in dealing with industrial disputes referred to it
                 under Section 10 is limited by Section 10(4) to  the  point
                 specifically  mentioned  in  the  reference   and   matters
                 incidental thereto, the appropriate Government should frame
                 the  relevant  orders  of  reference  carefully   and   the
                 questions which are intended to be tried by the  Industrial
                 Tribunal should be so worded  as  to  leave  no  scope  for
                 ambiguity or controversy. An  order  of  reference  hastily
                 drawn or  drawn  in  casual  manner  often  gives  rise  to
                 unnecessary disputes  and  thereby  prolongs  the  life  of
                 industrial adjudication which must always be avoided.


           26.   In Sindhu  Resettlement  Corporation  Ltd.  v.  Industrial
                 Tribunal  of   Gujarat   and   Ors.   MANU/SC/0233/1967   :
                 (1968)ILLJ834SC , their Lordships of the Supreme Court have
                 emphasised the importance of drafting  of  reference  under
                 Section 10 of the Industrial Disputes Act.  This  has  been
                 observed in this case as under at p. 839 :


                 "If no dispute at all is raised by the employees  with  the
                 management, any request sent  by  them  to  the  Government
                 would only be a  demand  by  them  and  not  an  industrial
                 dispute between them  and  their  employer.  An  industrial
                 dispute, as defined, must be a  dispute  between  employers
                 and workmen. The Government has to come to an opinion  that
                 an industrial dispute does exist and that opinion can  only
                 be formed on the basis that there was a dispute between the
                 employee and the employer.


                 Where the retrenched employee and the  Union  had  confined
                 their demand to the management to retrenchment compensation
                 only and did not make  any  demand  for  reinstatement  the
                 reference made  by  the  Government  under  Section  10  in
                 respect of reinstatement is not competent."






      17.   Appeals against the aforesaid decision  was  dismissed  by  this
      Court in Moolchand Kharati Ram Hospital vs.  Labour  Commissioner  and
      Ors. 2002 (10) SCC 708.  This shows that view of the Delhi High  Court
      in the aforesaid cases has been given imprimatur by this Court.

      18.   The Industrial Tribunal/  Labour  Court  constituted  under  the
      Industrial Disputes Act is a creature of  that  statute. 
 It  acquires
      jurisdiction on the basis of reference made to it. 
The Tribunal has to
      confine itself within the scope of the subject matter of reference and
      cannot travel beyond the same. 
This is the view taken by this Court in
      number  of  cases  including  in  the  case  of  National  Engineering
      Industries Limited v. State of Rajasthan & Ors. 2000 (1) SCC 371.

      19.   It is for this reason that it becomes the bounden  duty  of  the
      appropriate Government to make the reference  appropriately  which  is
      reflective of the real/ exact nature of “dispute” between the parties.
      
In the instant case, the bone of  contention  is  as  to  
whether  the
      respondent workmen were simply transferred by the  appellant  to  M/s.
      Lafarge or their services were taken over by  M/s.  Lafarge  and  they
      became the employees of the M/s. Lafarge. 
Second  incidental  question
      which would follow therefrom would be as to 
whether they have right to
      join back the services  with  the  appellant  in  case  their  service
      conditions including salary etc. which they  were  enjoying  with  the
      appellant are not given or protected  by  M/s.  Lafarge?    
If  it  is
      proved that their service conditions are  violated,  another  question
      would be as to 
whether they can claim the service benefits/ protection
      from M/s. Lafarge or they have the right to go back to the appellant?

      20.   It follows from the above that the reference in the present form
      is clearly defective as it does not  take  care  of  the  correct  and
      precise nature of the dispute between the parties.  
On  the  contrary,
      the manner in which the reference is worded shows that it has  already
      been decided that the respondent workmen continue to be the  employees
      of  the  appellant  and  further  that  their  services  were   simply
      transferred to M/s. Lafarge. 
This shall preclude the appellant to  put
      forth and prove its case as it would deter the labour court to go into
      those issues. 
It also implies that by presuming  so,  the  appropriate
      Government has itself decided those contentious issues and assumed the
      role of an adjudicator which is, otherwise, reserved  for  the  Labour
      Court/ Industrial Tribunal.

      21.   As a consequence,  this  appeal  is  allowed  and  the  impugned
      judgment of the High Court is set aside. 
Sequitur to that would be  to
      quash the references made in the present form. 
However,  at  the  same
      time, direction is given to the appropriate Government to  make  fresh
      reference, incorporating real essence of the dispute as  discussed  in
      this judgment, within a period of two months from the date of  receipt
      of the copy of this judgment.

      22.   The appeals are allowed and disposed of in the  aforesaid  terms
      with no order as to costs.




                                                          ..…………………………....J.
                               [K.S. RADHAKRISHNAN]



                                                           ...…………………………..J.
                                                                [A.K. SIKRI]


      NEW DELHI
      SEPTEMBER 16, 2013

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