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Wednesday, February 4, 2015

whether the appellants are entitled to claim the relief of payment of retrenchment compensation.

                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL No. 1389 OF 2015
                    (Arising out of SLP(C) No.33509/2011)

Oshiar Prasad and Others                     Appellant(s)


      The Employers in relation to
Management of Sudamdih
Coal Washery of M/s BCCL,
Dhanbad, Jharkhand                      Respondent(s)

                               J U D G M E N T

Abhay Manohar Sapre, J.
1.    Leave granted.
2.    This civil appeal  is  filed  by  the  unsuccessful  writ  petitioners
against the judgment and order dated 17.06.2011 passed by the High Court  of
Jharkhand at Ranchi in L.P.A. No. 447 of 2009 which arises out of the  order
dated 03.09.2009 passed by the learned single Judge of  the  High  Court  in
C.W.J.C. No. 616 of 1999(R).
3.    By impugned judgment, the Division  Bench  dismissed  the  appellants'
intra court appeal and upheld  the  order  of  the  writ  court,  which  had
dismissed the appellants' writ petition and in consequence upheld the  award
dated 21.12.1998  passed by  the Labour Court in Reference Case  No.  75  of
4.    In order to appreciate the controversy involved in this appeal, it  is
necessary to set out the facts in detail.
5.    The respondent - M/s Bharat Coking Coal Ltd (hereinafter  referred  to
as "the BCCL") is a Government of India undertaking.  It is engaged  in  the
business of manufacture and sale  of  various  kinds  of  coal.   It  has  a
colliery at Dhanbad, Jharkhand known as "Sudamdih Coal Washery".
6.    On 24.07.1974, the BCCL invited tenders for  construction  of  Washery
on Turnkey basis for running the colliery.   The  contract  was  awarded  to
one Company - M/s MC Nelly, Bharat  Engineering  Company  Ltd.  (hereinafter
referred to as "the Contractor").  An  agreement  was  accordingly  executed
between the BCCL and the Contractor on 29.01.1976.  Since the  execution  of
the work was to be done on turnkey basis, the Contractor was required to  do
every thing  to  make  the  Washery  operational.   The  work  included  the
complete  design  of  the  Washery,  supply  of   materials   required   for
construction of plant, building, installation of  machinery,  all  kinds  of
construction of the structures of Washery etc.
7.    Pursuant to the contract, the Contractor started the work in  1977  by
employing several skilled and unskilled workers and completed  the  same  by
December 1979. After completion of the work, the Contractor  terminated  the
employment of all the workers and offered them retrenchment compensation  as
per the provisions of Section 25 of Industrial Disputes Act, 1947 (in  short
"the Act") except 39 skilled workers, who were retained to  look  after  the
maintenance work of Washery after it was  made  operationalized.   These  39
workers continued to work.  After retaining their  services  for  about  one
year, the Management terminated  the  services  of  these  39  employees  in
January,  1981.   These  39  employees  raised  a  dispute  demanding  their
absorption and continuation in service with the BCCL.  Since  their  demands
were not accepted, a reference was made under  Section  10  of  the  Act  to
Industrial Tribunal No. 3 Dhanbad vide Reference Case  No.  58  of  1981  to
answer the following question:
"Whether the management of Sudamdih Coal Washery of M/s Bharat  Coking  Coal
Ltd., P.O. Sudamdih, Dist. Dhanbad are justified in not absorbing  Sarvashri
Gorakh Sharma and 38 others as their regular employees?   If  not,  to  what
relief are the said workmen entitled?"

8.    The Industrial Tribunal by its award  dated  03.03.1983  answered  the
reference in workers' favour and directed that 39  workers  be  absorbed  by
the BCCL in their employment as their regular employees and  they  be  given
all such consequential benefits to which they were entitled to claim due  to
their regularization in the services of BCCL.  The BCCL  did  not  challenge
the award and implemented  the  directions  by  absorbing  and  regularizing
these 39 workers in their employment.
9.    It may be  mentioned  that  five  workers  (including  the  appellants
herein), who claimed to be working in the same  project,  filed  Title  Suit
No. 51/1980 against the BCCL in the Court of Munsif 2nd Dhanbad under  Order
I Rule 11 of the Code of Civil Procedure, 1908  for  declaration  that  they
are entitled to continue in their services under the BCCL  and  prayed  that
their services be absorbed and regularized in the services of BCCL with  all
consequential benefits. They also prayed for an injunction  restraining  the
BCCL from terminating their services pending civil suit.
10.   The Trial Court, however, on contest declined to grant  the  temporary
injunction to the plaintiffs. It is not in dispute that during the  pendency
of the suit, the services of these workers  were  discontinued.  They  were,
therefore, no more in the employment.
11.    By judgment and decree dated 27.05.1983, the trial Court decreed  the
suit and held that the plaintiff's are entitled to continue in  services  of
12.   Felt aggrieved,  the BCCL filed Title Appeal No.  71  of  1983  before
the Appellate Court.  The  Appellate  Court  by  judgment  and  order  dated
16.12.1986 dismissed the appeal and confirmed the  judgment  and  decree  of
the Trial Court.
13.   The BCCL pursued the matter further and filed an appeal  being  Second
Appeal No.23 of 1987(R) before the High Court. The High Court,  by  judgment
and order dated 05.03.1993 allowed the  Second  Appeal  and  set  aside  the
judgment and decree of the two Courts  which  had  decreed  the  plaintiffs'
suit. It was held that the  suit  was  not  maintainable  in  the  light  of
provisions of Labour laws.
14.    Against  the  aforesaid  judgment,  the  plaintiffs  (workers)  filed
Special Leave Petition being Special Leave Petition (C)  No.  4495  of  1994
before this Court.  By order dated 14.11.1994, this  Court,  after  granting
leave, dismissed the appeal  (C.A.  No.8403/1994)  with  a  liberty  to  the
plaintiffs/appellants to approach the Industrial Tribunal for  claiming  any
appropriate relief, if so advised.
15.   It is with this background, the plaintiffs (five  workers)  approached
the Central Government under Section 10 of the Act and also on behalf of  as
many as 150 workers espousing their cause  in  representative  capacity  for
their absorption and regularization and  prayed  for  making  an  industrial
reference to the Industrial Tribunal for its  adjudication.  The  Government
acceded to their request and accordingly made  the  following  reference  to
the Industrial Tribunal to adjudicate:
"Whether the management of Sudamdih Coal Washery of M/s Bharat  Coking  Coal
Ltd., P.O. Sudamdih,  Dist. Dhanbad are justified in  not  absorbing  Ainuel
Haque and 150 others (as in the list annexed) as  their  regular  employees?
If not, to what reliefs are the said workmen entitled?"

16.   The  Industrial  Tribunal  by  award  dated  21.12.1998  answered  the
reference against the workers.  It was held that they were not  entitled  to
seek their absorption in the Services of BCCL as  their  regular  employees.
The workers, felt aggrieved, filed C.W.J.C.No. 616  of  1999(R)  before  the
High Court.  The learned single Judge by orders dated  03.09.2009  dismissed
the writ petition and upheld the award passed by the Tribunal.  The  workers
pursued the matter and filed intra Court appeal  being  L.P.A.  No.  447  of
2009.  The Division Bench by impugned judgment dismissed the appeal  finding
no fault in the award. Challenging the said order, the  workers  filed  this
appeal by way of special leave before this Court.
17.    While  assailing  the  legality  and  correctness  of  the   impugned
judgment, Mr. R.P. Bhatt, learned Senior Counsel for the  appellants  mainly
urged two points. His first submission was that the Courts  below  erred  in
not answering the reference in favour of the appellants and  thereby  Courts
below erred in not granting them the relief  for  which  the  reference  was
made.   His  second  submission  was  that  since  the  identical  reference
(Reference Case No.58/1981) made at the instance of  39  workers  alike  the
appellants was answered in workers' favour vide award  dated  03.03.1983,  a
fortiori, the present reference being identical in nature should  also  have
been answered in favour of the appellants  to maintain the parity. In  other
words, the submission was that  if  one  set  of  workers  got  the  benefit
earlier in point of time from the Court, the other set of workers  similarly
placed too should have been granted the same benefits.  In the  alternative,
learned Senior Counsel urged that in any  event,  the  appellants  were  not
paid any retrenchment compensation, for which otherwise they  were  entitled
to get from the Contractor or/and BCCL as per the provisions of  Section  25
of the Act read with the  provisions  of  Contract  Labour  Prohibition  and
Regulation  Act, 1970 and hence to this extent, this Court can still  direct
either Contractor or the BCCL or both, as  the  case  may  be,  to  pay  the
retrenchment compensation to the appellants.
18.   In Contra, learned  Counsel  for  the  respondent-BCCL  supported  the
impugned order and contended that no case is made out by the  appellants  to
interfere in the impugned order and hence the appeal merits dismissal.
19.   Having heard the learned counsel for the parties  and  on  perusal  of
the record of the case, we find no merit in  the  main  submissions  of  the
appellants but find substance in the alternative submission.
20.   Before we examine the factual matrix of the case in hand, we  consider
it apposite to take note of law  laid  down  by  this  Court  regarding  the
powers of the appropriate Government in making reference  under  Section  10
of the Act  and  the  jurisdiction  of  the  Tribunal  while  answering  the
reference.  Indeed it is well settled and remains no more res integra.
21.   One of the questions which fell for consideration  by  this  Court  in
Delhi Cloth and General Mills Co. Ltd. vs. The Workmen and Others (AIR  1967
SC 469) was that what are the powers of  the  appropriate  Government  while
making a reference and the scope and  jurisdiction  of  Industrial  Tribunal
under Section 10 of the Act.

22.   Justice Mitter, speaking for the  Bench, held as under:
"(8) ......Under S. 10(1)(d) of the Act,  it  is  open  to  the  appropriate
Government when it is of opinion that any industrial dispute exists to  make
an order in writing referring
"the dispute or any  matter appearing to be connected with, or  relevant  to
the dispute, a Tribunal for adjudication" under s. 10(4)
"where in an order referring  an  industrial  dispute  to  a  Labour  Court,
Tribunal or National Tribunal under this section or in a  subsequent  order,
the  appropriate  Government  has  specified  the  points  of  dispute   for
adjudication, the Labour Court or the Tribunal or the National Tribunal,  as
the case may be, shall confine its adjudication to those points and  matters
incidental thereto."

(9) From the above it therefore  appears  that  while  it  is  open  to  the
appropriate Government to refer the dispute or any matter  appearing  to  be
connected  therewith  for  adjudication,  the  Tribunal  must  confine   its
adjudication to the  points  of  dispute  referred  and  matters  incidental
thereto. In other words, the Tribunal is not free to enlarge  the  scope  of
the dispute referred to it but must confine  its  attention  to  the  points
specifically mentioned and anything which is incidental  thereto.  The  word
'incidental' means according to Webster's New World Dictionary :
"happening or likely to  happen  as  a  result  of  or  in  connection  with
something more important; being an incident;  casual;  hence,  secondary  or
minor, but usually associated :"

"Something incidental to a dispute" must therefore mean something  happening
as a result of or in connection with the  dispute  or  associated  with  the
dispute. The dispute is the fundamental  thing  while  something  incidental
thereto is an adjunct to it. Something incidental, therefore, cannot cut  at
the root of the main thing to which it is an adjunct to it....."

23.   The same issue came up for consideration before three Judge  Bench  in
a case reported in Pottery Mazdoor Panchayat vs. Perfect  Pottery  Co.  Ltd.
and Another, (1979) 3 SCC 762.   Justice  Y.V.  Chandrachud  -  the  learned
Chief Justice speaking for the Court laid down the following proposition  of

"10. Two questions were argued before the High Court: Firstly,  whether  the
tribunals had jurisdiction to question the  propriety  or  justification  of
the closure and secondly, whether they  had  jurisdiction  to  go  into  the
question of retrenchment compensation. The High Court has held on the  first
question that the jurisdiction of the Tribunal  in  industrial  disputes  is
limited to the points specifically referred  for  its  adjudication  and  to
matters incidental thereto and that the Tribunal cannot go beyond the  terms
of the reference made to it. On the  second  question  the  High  Court  has
accepted the respondent's  contention  that  the  question  of  retrenchment
compensation has to be decided under Section 33-C(2) of the Central Act.
11. Having heard a closely thought out argument made by Mr. Gupta on  behalf
of the appellant, we are of the opinion that the High Court is right in  its
view on the first question. The very terms of the references show  that  the
point of dispute between the parties was not the fact of the closure of  its
business by the respondent  but  the  propriety  and  justification  of  the
respondent's  decision  to  close  down  the  business.  That  is  why   the
references were expressed  to  say  whether  the  proposed  closure  of  the
business was proper and justified. In other words, by  the  references,  the
Tribunals were not called upon by the  Government  to  adjudicate  upon  the
question as to whether there was in fact a closure of  business  or  whether
under the pretence of closing the business the workers were  locked  out  by
the management. The references [pic]being limited to the narrow question  as
to whether the closure was proper and justified, the Tribunals by  the  very
terms of the references, had no  jurisdiction  to  go  behind  the  fact  of
closure and inquire into the question  whether  the  business  was  in  fact
closed down by the management."

24.   The abovesaid principle of law has  been  consistently  reiterated  in
M/s Firestone  Tyre  &  Rubber  Co.  of  India  (P)  Ltd.  vs.  The  Workmen
Empoloyed, represented by Firestone Tyre employees' Union AIR 1981 SC  1626,
National Engineering Industries Ltd. vs. State of Rajasthan &  Ors.,  (2000)
1 SCC 371,  Mukand Ltd. vs. Mukand Staff & Officers' Association, (2004)  10
SCC 460 and  State Bank of Bikaner & Jaipur vs. Om Prakash Sharma, (2006)  5
SCC 123.
25.   It is thus clear that the appropriate Government is empowered to  make
a reference under Section 10  of  the  Act  only  when  "Industrial  dispute
exists" or "is apprehended between  the  parties".  Similarly,  it  is  also
clear that the Tribunal while answering the reference  has  to  confine  its
inquiry to the question(s)  referred  and  has  no  jurisdiction  to  travel
beyond the question(s) or/and the terms of  the  reference  while  answering
the reference. A fortiori, no inquiry can be made on those questions,  which
are  not  specifically  referred  to  the  Tribunal  while   answering   the
26.   Coming now to the facts of this case, it is an admitted case that  the
services of the appellants and those at whose  instance  the  reference  was
made were terminated long back prior to  making  of  the  reference.   These
workers were, therefore, not in the services  of  either  Contractor  or/and
BCCL on the date of making the reference in question.  Therefore, there  was
no industrial  dispute  that  "existed"  or  "apprehended"  in  relation  to
appellants' absorption in the services of the BCCL on  the  date  of  making
the reference.
27.   Indeed a dispute regarding the appellants' absorption was  capable  of
being referred to in reference for adjudication, had the appellants been  in
the services of Contractor or/and  BCCL.   But  as  said  above,  since  the
appellants' services were discontinued or/and  retrenched  (whether  rightly
or wrongly) long back, the question of their  absorption  or  regularization
in the services of BCCL, as claimed by them, did  not  arise  and  nor  this
issue could have been gone into on its merits for the  reason  that  it  was
not  legally  possible  to  give  any  direction  to  absorb/regularize  the
appellants so long as they were not in the employment.
28.   It is a settled principle of law that  absorption  and  regularization
in the service can be claimed or/and  granted  only  when  the  contract  of
employment subsists and is in force inter se employee  and  employer.   Once
it comes to an end either by efflux of time or  as  per  the  terms  of  the
Contract of employment or by its termination by the employer, then  in  such
event, the relationship of employee and employer comes  to  an  end  and  no
longer subsists except for the limited purpose to examine the  legality  and
correctness of its termination.
29.   In  our  considered  opinion,   the  only  industrial  dispute,  which
existed for being referred to the Industrial Tribunal for  adjudication  was
in relation to termination of appellants' employment   and    -  whether  it
was legal or not? It is an admitted fact that it was  not  referred  to  the
Tribunal and, therefore, it attained finality against the appellants.
30.   In our considered opinion, therefore, the reference, even if  made  to
examine the issue of absorption of the appellants in the services  of  BCCL,
the same was misconceived.
31.   Apart from this infirmity noticed in this case, we have also not  been
able  to  find  any  parity  in  the  facts   of   the   earlier   reference
(R.C.No.58/81) and the case in hand. As noted above, the  earlier  reference
was made to decide the absorption of 39 workers in the BCCL. This  could  be
made because they were in the service.   So  far  as  the  present  case  is
concerned, the appellants  were  not in service.
32.   It can safely be noted that merely because the  workers  in  both  the
references were working in one project by itself  was  not  enough  to  give
them any right to claim parity with the claim of others.  So  long  as,  the
parity was not proved on all the relevant issues arising  in  the  case,  no
worker whether individual or collectively was entitled to claim  the  relief
only on the basis of similarity in the status qua employer.
33.   In the light  of  foregoing  discussion,  we  are  of  the  considered
opinion that  the  reference  made  to  examine  the  issue  of  appellants'
absorption qua the BCCL was incapable of  being  referred  to  on  the  said
question and in any event,  it was incapable of being answered in favour  of
the appellants.
34.   That apart, when three Courts, despite this infirmity, went  into  the
facts  and  held  that  the  appellants  were  not  entitled  to  claim  any
absorption in the services qua the BCCL, then  in  our  considered  opinion,
they were right in holding so and we do not find any good ground to go  into
the factual issues de  novo  in  our  appellate  jurisdiction.  The  factual
findings recorded by the three Courts are binding on this Court.
35.   We, therefore, find no ground to set  aside  the  impugned  order  and
accordingly uphold the same.
36.   This takes us to the next question as to whether  the  appellants  are
entitled to claim  the  relief  of  payment  of  retrenchment  compensation.
Having given our  anxious  consideration  to  this  issue,  we  are  of  the
considered view that having regard to the peculiar facts of  this  case  and
the reasons, which we have set out hereinbelow,  we  are  inclined  to  hold
that the appellants are entitled  to  claim  the  retrenchment  compensation
from the Contractor/BCCL.
37.   It is for the reason that firstly, the  respondent  in  their  written
statement filed before the Tribunal have offered  to  pay  the  retrenchment
compensation to all such  workers  in  accordance  with  the  provisions  of
Section 25F of the Act. Secondly, no documents were filed by the  respondent
to show that any such compensation was paid to  the  appellants  or  to  any
worker till date by the respondent and lastly, more than three decades  have
passed and yet the issues of absorption, and/or payment of compensation  has
not attained finality.
38.   Indeed, in similar circumstances, this Court in the  case  of  Pottery
Mazdoor Panchayat's  case  (supra)  had  directed  payment  of  retrenchment
compensation to the workers and made the  following  pertinent  observations
in the concluding paras:
"17. It is unnecessary to  consider  the  second  question  as  regards  the
payment of retrenchment compensation and  we  will,  therefore,  express  no
opinion as to whether  the  Tribunals  had  jurisdiction  to  go  into  that
question. Happily,  the  parties  have  arrived  at  a  settlement  on  that
question under which, the respondent agrees to fix within a  period  of  six
months from today the retrenchment compensation payable  to  the  retrenched
workers in accordance with the provisions of Section 25FFF  of  the  Central
Act, namely, the Industrial Disputes Act,  1947,  without  the  aid  of  the
proviso to that section. After the retrenchment compensation is so fixed,  a
copy of the decision fixing the compensation payable to each of  the  worker
will be sent by the respondent to the appellant Union. The workers or  their
legal representatives, as the case may be, will then be entitled to  receive
the retrenchment compensation from the respondent, which agrees to  pay  the
same to them. The respondent will be entitled to set off of the  amounts  of
retrenchment compensation already paid to the workers  against  the  amounts
found due to them under  this  settlement.  On  receiving  the  retrenchment
compensation the workers concerned shall withdraw the applications, if  any,
filed by them for relief in that behalf.

18. We would only like to add that the compensation which will  be  paid  to
the workers will be without  prejudice  to  their  right,  if  any,  to  get
employment from the respondent in the new  business  as  and  when  occasion

39.   Following  the  course  adopted  by  this  Court  in  Pottery  Mazdoor
Panchayat (supra), we direct the Industrial Tribunal to verify the  case  of
the appellants (150 or so) for deciding each worker's claim for  payment  of
retrenchment compensation to him/her as per the provisions  of  Section  25F
of the Act and accordingly he/she be  paid  retrenchment  compensation.   In
case any worker has expired then his/her  compensation  amount  be  paid  to
his/her legal representative after making proper verification of the case.
40.   We, however, make it clear that the respondent  would  not  raise  any
objection about the maintainability of workers' claim nor  would  raise  any
objection on merits before the Tribunal and the inquiry would  only  confine
to determine the  quantum  of  retrenchment  compensation  payable  to  each
41.   The appellants and respondents would appear  before  the  Tribunal  on
16.02.2015 and file necessary documents to enable  the  Tribunal  to  verify
the claim of each worker for determining the quantum of  compensation.   The
Tribunal would issue notice to the Contractor to enable them to  participate
in  the  proceedings  in  the  light  of  provisions  of   Contract   Labour
Prohibition and Regulation Act, 1970. The appellants and  all  such  workers
can be represented through recognized Union before the Tribunal.
42.   The entire exercise should be completed and payment  be  made  to  the
workers within six months.
43.   With these directions, the appeal stands disposed of.


                       [ABHAY MANOHAR SAPRE]

      New Delhi;
      February 02, 2015.

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