Ltd. Vs. Murphy India Employees Union  Insc 239 (25 April 2006)
Sinha & P.K. Balasubramanyan
out of S.L.P. (Civil) No.6897 of 2005] S.B. SINHA, J :
of a settlement arrived at by and between the parties herein is in question in
this appeal which arises out of a judgment and order dated 11.01.2005 passed by
a learned Single Judge of the High Court of Judicature at Bombay in Writ Petition No.1785 of 2001.
India Ltd. (Murphy) was a manufacturer of Radio and Television sets. Norwest
Electronics Ltd. (for short, 'Norwest'), which was running a servicing centre,
was a sister concern of Murphy India Ltd. It had been carrying out maintenance
and repair works of the products of Murphy at its Thane factory. It was an
establishment within the meaning of the provisions of the Industrial Employment
(Standing Orders) Act, 1946, (1946 Act ). The concerned workmen were on the
rolls of Norwest. The Provident Fund and E.S.I.C. Code Number of both the
companies were the same. Some workmen working in the said Norwest were its
permanent employees. Murphy became a sick company. It was referred to the Board
of Industrial and Financial Reconstruction (BIFR). Pursuant to a scheme made by
it on or about 31.08.1990 Murphy merged with the appellant- company. It
undertook the maintenance and repair works carried out at the factory of Murphy
situated at Parel. Some of the workmen of Norwest, who were represented by the Union herein, had been assured that they would be provided
with employment on permanent basis by the appellant herein. 45 workmen had
applied for employment with its Electronics Division. They were issued fresh
appointment letters with effect from 01.02.1991. They were initially appointed
on temporary basis at Parel Unit of the appellant, wherein sales and service of
the Radios and Televisions used to be carried out. Indisputably, the said
establishment was registered under the Bombay Shops and Commercial
Establishment Act, 1948 (for short, 'the 1948 Act').
initially existence of the Certified Standing Orders was denied by the
appellant, a copy thereof was produced before the High Court, in terms whereof,
the employees appointed on probation were to get the permanent status on the
expiry of six months from the date of joining the service; whereas in terms of
the Model Standing Orders, such permanent status was to be conferred on the
workmen on the expiry of three months of their being placed on probation.
Murphy. was referred to the BIFR and its consequent merger with the appellant,
appointments had been given to 45 workmen on and from 01.02.1991. Although they
had been appointed on temporary basis, they were put on probation by an order
dated 01.05.1991 with effect from 1.2.1991. They had been kept on probation
till 1996 and their services had been terminated thereafter. Termination of the
services of the said workmen had given rise to another industrial dispute and
it is stated at the bar that an award has been passed in favour of the workmen.
The said matter, however, is pending adjudication before the Bombay High Court
and the execution of the award has been stayed.
about 29.04.1991, a Memorandum of Settlement was entered into between the
Electronics Division of the appellant herein and the respondent Union, which
was recognized in terms of the Maharashtra Recognition of Trade Unions and
Prevention of Unfair Labour Practices Act, 1971 (for short, 'the 1971 Act') for
resolution of the disputes arising out a Charter of Demands made on 27.10.1989
in respect of the workmen working in the shop floor and office of the company
situated at Thane and Parel.
about 06.10.1992, a complaint was filed by the respondent- Union about the
violation of the terms of the said settlement, alleging unfair labour practices
as contained in Item Nos. 1(a) and 4(g) of the Second Schedule and Item Nos.6
and 9 of the Fourth Schedule appended to the said Act. A prayer for payment of
the same wages as are paid to the permanent workmen of the company as also a
declaration that the said workmen had become the permanent workmen of the
company from their respective dates of joining or with effect from 01.02.1991,
was also made. The appellant denied and disputed that it had committed any
unfair labour practice.
view of the rival contentions raised before the Industrial Tribunal, the
following issues were framed :
Complainant prove that they are permanent employees since joining Norwest
Electronics Ltd. and/or Ceat Ltd. and they are entitled to full back wages and
continuity of service w.e.f. 01.02.1991?
Respondent has committed Unfair Labour Practice under Items 1(a), 4(a) of
Schedule II and Item 3, 6 and 9 of Schedule IV of the MRTU & PULP
Act?" Before the Industrial
Court, reliance was
placed by the respondent on the said settlement dated 29.04.1991.
reason of an award dated 29.03.2001, the Industrial Court held that the
benefits under the said settlement must be held to have been rendered to the concerned
workmen, in terms whereof they became entitled to the status of permanent
workmen on the expiry of the period of probation of three months, and were,
thus, also entitled to the other benefits envisaged thereunder .
Monetary benefits were directed to be paid to the workmen with compound
interest @ 12% p.a.
legality or otherwise of the said award came to be questioned by the appellant
by filing a writ petition before the Bombay High Court. The said writ petition
has been dismissed by reason of the impugned judgment.
T.R. Andhyarujina, the learned Senior Counsel appearing on behalf of the
appellant, would submit that the Industrial Court as also the High Court
overlooked the fact that in terms of Section 18(3)(c) of the Industrial
Disputes Act, 1947 (for short, 'the 1947 Act'), the benefits of the said
settlement dated 29.04.1991 having been given only to the permanent workmen who
were appointed with effect from 01.02.1991, benefits thereof could not have
been directed to be given to the concerned workmen who joined the establishment
on a temporary basis and/or on probation only with effect from 01.02.1991.
submitted that the High Court fell into an error in holding that despite the
fact that the number of workmen had fallen to less than 50, the provisions of
Model Standing Orders framed under the 1946 Act would not apply in the case of
the concerned workmen.
Jane Cox, the learned counsel appearing on behalf of the respondent-Union, on
the other hand, submitted that the said settlement dated 29.04.1991 must be
read in its entirety and so read it would be evident that the same would also
apply to such workmen who joined the services of the appellant's establishment
on and from 01.02.1991. It was further submitted that applicability of the
provisions of the Model Standing Orders or the Certified Standing Orders framed
under the 1946 Act having been made a part of the settlement, it matters little
as to whether the status of the permanent workmen was to be given to the concerned
workmen on the expiry of three moths or six months from the date of their
also not in dispute that a Memorandum of Settlement within the meaning of
Section 2(p), read with Section 18(1) of the 1947 Act and Rule 62 of the
Industrial Disputes (Bombay) Rules, had been arrived at between the parties on
or about 29.04.1991, the relevant clauses whereof are as under:
the President, MAHARASHTRA SHRAMIC SENA, a recognized Union under the
Provisions of the MRTU & PULP Act, 1971 (hereinafter referred to as the
Union) representing the workmen of M/s CEAT LIMITED, ELETRONICS DIVISION
(hereinafter referred to as the Company) served the Charter of Demands on 27th
February, 1989 on the Company in respect of the workmen working on the Shop
floor and the office of the company situated at Thane and Parel under cover of
their letter dated 27th February, 1989 relating to wage Scale, Classifications,
Dearness Allowance, Leave Facilities, Leave Travel Allowance, Transports etc.
and have also forwarded supplementary demands in relation to Lunch Allowance,
Five days week working, etc. as contained in their supplementary Charter dated
9th March, 1989.
whereas the negotiations were held between the representatives of the Company
and the representatives of the Union from time
to time on the said set of Charter of Demands parties have reached a package
settlement covering the service conditions and terms of employment applicable
to the workmen at Thane and Head Office establishment. Parties therefore have
agreed to sign the settlement in full and final satisfaction of all the demands
in accordance with Section 2(p) read with Section 18(1) of the Industrial
Disputes Act, 1947 and under the Rules 62 of the Industrial Disputes (Bombay) Rules, 1957.
THIS SETTLEMENT WITNESS AS FOLLOWS
settlement shall cover all terms and conditions of service of various
categories of permanent workmen and shall apply to all permanent workmen
(hereinafter referred to as "workmen") who are on the rolls of the
Company as on 31st December, 1990 at the Company's Head Office and other
Factories, establishments situated at Bombay and Thane.
means from 1st of January to 31st December of any year." Under the heading
'Code of Conduct', it provided that the Code of Conduct shall operate
concurrently with the Company's Standing Orders and not in derogation thereof.
The said Code of Conduct was evolved to repress the hardship arising out of the
implementation of the Standing Orders.
4 of the said settlement provides for period of apprenticeship, inter alia, stating
successful completion of three years apprenticeship subject to the availability
of vacancies having due regard to suitability to the post the apprentices will
be offered employment and will be absorbed with due regard to seniority in
regular employment under such terms and conditions prevailing for regular
employees and shall be issued regular appointment letters." Provision has
been made to pay stipend to the apprentices and other benefits and facilities
arising therefor. Probation of the employees was to be governed by the Standing
Orders. The matter relating to confirmation of employees has been provided for
in clause 8 of the settlement stating that the same would be as per the
Standing Orders. Clause 11 provides for fitment in the regular grades after
successful completion of three years period.
18(1) of the 1947 Act provides as under :
"Persons on whom settlement and awards are binding.-
arrived at by agreement between the employer and workman otherwise than in the
course of conciliation proceeding shall be binding on the parties to the
agreement." The State of Maharashtra
indisputably has made an amendment in sub-section (1) of Section 18 of the 1947
Act, in terms whereof, the following proviso was added :
that, where there is a recognized union for any undertaking under any law for
the time being in force, then such agreement (not being an agreement in respect
of dismissal, discharge, removal, retrenchment, termination of service, or
suspension of an employee) shall be arrived at between the employer, and the
recognized union only; and such agreement shall be binding on all persons
referred to in clause (c) and clause (d) of sub-section (3) of this
section." Section 18(3) of the 1947 Act reads as under :
A settlement arrived at in the course of conciliation proceedings under this
Act or an arbitration award in a case where a notification has been issued
under sub-section (3A) of Section 10A or an award of a Labour Court, Tribunal or National Tribunal
which has become enforceable shall be binding on
all parties to
the industrial dispute;
parties summoned to appear in the proceedings as parties to the dispute, unless
the Board, arbitrator, Laour Court, Tribunal or National Tribunal, as the case
may be, records the opinion that they were so summoned without proper cause;
where a party
referred to in clause (a) or clause (b) is an employer, his heirs, successors
or assigns in respect of the establishment to which the dispute relates;
where a party
referred to in clause (a) or clause (b) is composed of workmen, all persons who
were employed in the establishment or part of the establishment, as the case
may be, to which the dispute relates on the date of the dispute and all persons
who subsequently become employed in that establishment or part." The 1971
Act was enacted, inter alia, to provide for recognition of trade unions inter alia
for facilitating collective bargaining for certain undertakings. Section 4
thereof provides for constitution of the Industrial Court. Chapter III provides for recognition of Unions. Chapter IV
provides for obligations and rights of recognized Unions, other Unions and
certain employees. Sub-section (2) of Section 20 of the 1971 Act reads as under
there is a recognized union for any undertaking, -
that union alone
shall have the right to appoint its nominees to represent workmen on the Works
Committee constituted under section 3 of the Central Act;
shall be allowed to appear or act or be allowed to be represented in any
proceedings under the Central Act (not being a proceeding in which the legality
or propriety of an order or dismissal, discharge, removal, retrenchment,
termination of service, or suspension of an employee is under consideration),
except through recognized union and the decision arrived at, or order made, in
such proceeding shall be binding on all the employees in such undertaking; and
accordingly, the provisions of the Central Act, that is to say, the Industrial
Disputes Act, 1947, XIV of 1947, shall stand amended in the manner and to the
extent specified in Schedule I." Section 21 of the 1971 Act provides that
no employee in an undertaking to which the provisions of the Central Act for
the time being apply, shall be allowed to appear or act or allowed to be
represented in any proceeding relating to unfair labour practices specified in
items 2 and 6 of Schedule IV of this Act except through the recognized union.
LABOUR PRACTICE :
VI of the 1971 Act deals with Unfair Labour Practices, which term has been
defined in Section 26 thereof to mean any of the practices listed in Schedules
II, III and IV of the Act, unless the context otherwise requires.
4(a) of Schedule II, and Item Nos.3, 6 and 9 of Schedule IV, which are relevant
for the purpose of the case, read as under :
"To interfere with, restrain or coerce employees in the exercise of their right
to organize, form, join or assist a trade union and to engage in concerted
activities for the purposes of collective bargaining or other mutual aid or
protection, that is to say (a) threatening employees with discharge or
dismissal, if they join a union;" "4. To encourage or discourage
membership in any union by discriminating against any employee, that is to say (a)
discharging or punishing an employee because he urged other employees to join
or organize a union;" "3. To transfer an employee mala fide from one
place to another, under the guise of following management policy."
"6. To employ employees as "badlis", casuals or temporaries and
to continue them as such for years, with the object of depriving them of the
status and privileges of permanent employees." "9. Failure to
implement award, settlement or agreement." Section 28 of the 1971 Act
provides for procedure for dealing with complaints relating to unfair labour
practices, in the following terms :
Procedure for dealing with complaints relating to unfair labour practices :
Where any person
has engaged in or is engaging in any unfair labour practice, then any union or
any employee or any employer or any Investigating Officer may, within ninety
days of the occurrence of such unfair labour practice, file a complaint before
the Court competent to deal with such complaint either under section 5, or as
the case may be, under section 7, of this Court.
that, the Court may entertain a complaint after the period of ninety days from
the date of the alleged occurrence, if good and sufficient reasons are shown by
the complainant for the late filing of the complaint.
The Court shall
take a decision on every such complaint as far as possible within a period of
six months from the date of receipt of the complaint.
On receipt of a
complaint under sub-section (1), the Court may, if it so considers necessary,
first cause an investigation into the said complaint to be made by the
Investigating Officer, and direct that a report in the matter may be submitted
by him to the Court, within the period specified in this direction.
investigating into any such complaint, the Investigating Officer may visit the
undertaking, where the practice alleged is said to have occurred, and make such
enquiries as he considers necessary. He may also make efforts to promote
settlement of the complaint.
Investigating Officer shall, after investigating into the complaint under
sub-section (4) submit his report to the Court, within the time specified by
it, setting out the full facts and circumstances of the case, and the efforts
made by him in settling the complaint. The Court shall, on demand and on
payment of such fee as may be prescribed by rules, supply a copy of the report
to the complaint and the person complained against.
If, on receipt
of the report of the Investigating Officer, the Court finds that the complaint
has not been settled satisfactorily, and that facts and circumstances of the
case require, that the matter be further considered by it, the Court, shall
proceed to consider it, and give its decision.
The decision of
the Court, which shall be in writing, shall be in the form of an order. The
order of the Court shall be final and shall not be called in question in any
civil or criminal court.
The Court shall
cause its order to be published in such manner as may be prescribed. The order
of the Court shall become enforceable from the date specified in the order.
The Court shall
forward a copy of its order to the State Government and such officers of the State
Government as may be prescribed." We have noticed hereinbefore that the
establishment in question is governed by the provisions of the 1948 Act,
Section 38-B whereof reads as under :
Application of Industrial Employment (Standing Orders) Act to establishments.
The provisions of the Industrial Employment (Standing Orders) Act, 1946, in its
application to the State of Maharashtra (hereinafter in this section referred
to as "the said Act"), and the rules and standing orders (including
model standing orders) made thereunder from time to time, shall mutatis
mutandis, apply to all establishment wherein fifty or more employees are
employed and to which this Act applies, as if they were industrial
establishment within the meaning of the said Act." It is, however, not in
dispute that the establishment had its own certified standing orders.
OF TERMS OF SETTLEMENT :
preamble of the settlement refers to the Charter of Demands served upon the
appellant on 27.02.1989 in respect of the shop floor and office of the company
situated at Thane and Parel relating to wage scale, classification, dearness
allowance, leave facilities, leave travel allowance, transports etc.
Supplementary demands were also raised. The parties reached a package settlement
covering the service conditions and terms of employment applicable to the
workmen at Thane and Head Office. The said settlement was to cover all terms
and conditions of service of various categories of permanent workmen; and was
to apply to all permanent workmen who were on the rolls of the company as on
31.12.1990. The said Memorandum of Settlement, indisputably, was entered into
it apply only to those workmen who were on the rolls of the company as on
31.12.1990 is the question.
said settlement was only to apply to the permanent workmen, who were on the
rolls of the company as on 31.12.1990, evidently it would not have contained
any provision for appointment of apprentices, payment of stipend and probation
or confirmation or their fitment.
Memorandum of Settlement must be read in the context in which the same was
made. If the said settlement is given a narrow meaning, as has been contended
by Mr. Andhyarujina, the same would defeat the purpose thereof. It may be true
that by reason of a settlement, a cut-off date may be provided or the benefits
be given only to a class of employees but with a view to give a proper meaning
to the terms of the settlement, the court would be entitled to notice the
source of the dispute. The workmen of Norwest were not on the rolls of the
company; they became its employees only with effect from 01.02.1991. Their
terms and conditions were already governed by the Certified Standing Orders. A
Code of Conduct was required to be evolved only as regard the workmen who came
on the rolls of the company after 31.12.1990.
said Code of Conduct was evolved to repress the hardships which had already
been confronted by the use of the Standing Orders of the company. It was to
operate concurrently with the Certified Standing Orders.
of the provisions in the Code of Conduct expected of the employees evidently
were not governed by the Certified Standing Orders. The settlement not only
provides for appointment of apprentices, who would be governed by the provisions
of the Apprentices Act, 1961 but also for the eligibility criteria therefor in
terms whereof the first preference was to be given to the sons and daughters of
the employees and the ex-employees of the company, had either retired from
service or accepted Voluntary Retirement Scheme, or expired during service. The
eligibility criteria also provides that the applicant should complete 18 years
of age as on the date of application. Indisputably, in terms of the provisions
of the Apprentices Act, no apprentice would have a right of a job or promotion.
The Memorandum of Settlement, however, provides for their absorption on
successful completion of three years' apprenticeship. It provides for seniority
and furthermore lays down criteria for determination thereof.
provisions relating to probation and confirmation of the workmen would not fit
in with the concept of applicability of the settlement only to those who were
on the permanent rolls of the company as on 31.12.1990.
thus, the said settlement not only covers those who were permanent workmen as
on the said date and had ceased to be workmen but also those who were to be
appointed at a later date.
STANDING ORDERS :
of the provisions of the 1948 Act is not in question. The only contention
raised is the applicability of the Model Standing Orders.
fact that the company had its Certified Standing Orders is not in dispute.
same finds reference in the Memorandum of Settlement itself.
of probation as also confirmation in the services were to be in terms of the
Standing Orders. It has not been disputed before us that whereas the Model
Standing Orders provided for a successful period of probation of three months;
under the Certified Standing Orders, the period thereof was to be six months.
have noticed hereinbefore that the appellant at one stage denied and disputed
the applicability of the Model Standing Orders and only at a latter stage, in a
proceeding before the High Court, they produced a xeroxed copy of the Certified
Standing Orders, evidently with a view to show that the successful period of
probation was not three months as per the Model Standing Orders but in fact was
this case, whether the period of probation was three months or six months is
not of much significance; as the workmen had been kept on probation by an order
dated 01.05.1991 with retrospective effect from 01.02.1991. Evidently they
were, thus, entitled to the status of permanent workmen on completion of six
months' period if not three months. They were kept on probation till 1996 and,
thus, they had admittedly completed the period of six months. Once they had
successfully completed the period of probation, they were entitled to the
status of permanent workmen, the consequences whereof would be that they became
entitled to all the benefits and privileges in terms of the settlement as
OF 1948 ACT
submission that having regard to the fact that the number of workmen in the
said establishment was less than 50 as is provided for in Section 38-B of 1948
Act, is again of not much significance.
be true that provisions of the Payment of Gratuity Act, 1972 and the Employees'
Provident Funds and Miscellaneous Provisions Act, 1952 specifically provide
that in the event an establishment becomes liable thereunder, it would continue
to be so despite the fact that the number of workmen goes below the prescribed
limit, but in this case, we are not beset with such a question.
need not enter into the controversy as to whether such a contingency would
ensue even in respect of the employees governed by the 1948 Act; inasmuch as in
the instant case, the Certified Standing Orders forms part of the settlement
itself. The Certified Standing Orders, therefore, govern the terms and
conditions of the service of the workmen apart from those which were
specifically mentioned in the Settlement.
thus, do not find any force in the said submission.
would submit that the rate of interest awarded by the High Court being 12% p.a.
is on a high side. We, in the peculiar facts and circumstances of the case and
having regard to the current rate of interest prevailing in the market, direct
that the rate of interest would be 9% p.a.
to the modification aforementioned, this appeal is dismissed.
appellant shall pay and bear the costs of the respondent in this appeal.
fee assessed at Rs. 5,000/-.