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Full Case Details
A.K. SIKRI, J.
- Leave granted.
- 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. - 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, - 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. - 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. - 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
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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. - 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. - 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. - 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. - It is how the parties are before us in the present proceedings.
- 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
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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.” - 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. - 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. - 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
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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. - 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.” - 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. - 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
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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. - 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.” - 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. - 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. - 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
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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. - 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. - The appeals are allowed and disposed of in the aforesaid terms with no order as to costs.
[K.S. RADHAKRISHNAN] ……………………………..J.
[A.K. SIKRI]……..J
