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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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