WP(C) No.7585/2007 Page 1 of 41 * HIGH COURT OF DELHI : NEW DELHI + W.P. (C) No.7585/2007 % Judgment decided on: March 23, 2011 M/s. Bata India Ltd. ......Petitioner Through: Mr. Ashok Desai, Sr. Adv., Mr. Raj Birbal, Sr. Adv. with Ms. Raavi Birbal, Adv. Versus Union of India & Ors. .....Respondents Through : Mr. Sanjay Parikh, Adv. with Mr. Abinash Mishra, Ms. Mamta Saxena and Ms. Soumya Roy, Advocates. Coram: HON'BLE MR. JUSTICE MANMOHAN SINGH 1. Whether the Reporters of local papers may be allowed to see the judgment? Yes 2. To be referred to Reporter or not? Yes 3. Whether the judgment should be reported Yes in the Digest? MANMOHAN SINGH, J. 1. The present writ petition has been filed by the petitioner under Articles 226 and 227 of the Constitution of India praying to quash the reference order dated 05.09.2007 passed by the Joint Secretary, Ministry of Labour, under the provisions of Section 7B of Industrial Disputes Act, 1947 (hereinafter referred to as the “Act”). 2. The facts of the case are that there was a dispute concerning about the termination of more than two hundred of shop managers between the petitioners and the respondent No.2, i.e., All India Bata Shop Managers Union. On 15.06.2007, the president of respondent No.2 wrote WP(C) No.7585/2007 Page 2 of 41 a letter addressed to the Chief Labour Commissioner asking him to refer the dispute to a National Tribunal. Thereafter, the responent No.1 passed the order dated 05.09.2007 and constituted a National Tribunal for Adjudication of the dispute with its headquarter at Kolkata. The said order reads as under : “Whereas the Central Government is of the opinion that an Industrial Dipsute exists between the management of M/s. Bata India Ltd. & their workmen represented by All India Bata Shop Managers Union in respect of the matters prescribed in the Schedule hereto annexed and that the dispute involves question of national importance and also is of such nature that the establishments of M/s. Bata India Ltd. are situated in more than one State are likely to be interested in or affected by such dispute.” It was further stated in the said order which read as under : “NOW, THEREFORE, the Central Governemnt, in exercise of the powers conferred by Section 7B of the ID Act, 1947 (14 of 1947), hereby constitute a National Tribunal with head quarters at Kolkata and appoints Justice C.P. Mishra is the Presiding Officer, and he exercise the powers conferred by Sub Section (A) of Section 10 of the said Act, hereby referes the said industrial dispute to the National Tribunal for Adjudication.” 3. In the reference order, the Government has constituted a National Tribunal for deciding termination cases of All India Bata Shop Managers. The reference was made under the provision of Section 7B (1) of the Act. 4. It appears from the provision of Section 7B(1) of the Act that for a dispute to be referred to National Tribunal two conditions have to be satisfied : WP(C) No.7585/2007 Page 3 of 41 (i) the issue must question of national importance; or (ii) all the questions must be of nature that industrial establishment in more than one States are likely to be interested in or affected by that dispute. 5. The petitioner has challenged the reference order of the Government and mainly argued that : Reference to National Tribunal are not called for in the facts of the present case; and The shop managers are not workmen under Section 2(s) of Industrial Disputes Act. 6. It is stated by the petitioner that a dispute of national importance would be such where some important question of law is involved which is going to affect the fate of workmen in general throughout India or the fate of employers throughout India. The adjudication of individual disputes of different workmen cannot be referred to National Tribunal just because the workmen are spread over in different States. Dismissal of group of workmen cannot be considered an important question of law or a question of national importance. There was no material before the Central Government to refer the matter to the National Tribunal. Thus, it would not be a dispute of national importance. 7. According to the petitioner, the different establishments in different States do not mean that if one establishment has branches in different States then all those branches can be treated as different WP(C) No.7585/2007 Page 4 of 41 establishments in different States. In order dated 05.09.2007, it is demonstrated that the respondent No.1 instead of considering whether the present dispute is of such nature as those wherein several other establishments situated in one or more than one State are likely to be interested or affected, only considered whether the shop managers in more than one State would be affected. It is a settled law that where there are pre-conditions laid down for the exercise of power, it is necessary for the Authority exercising that power to make sure that those pre-conditions have been satisfied. Therefore, the impugned order dated 05.09.2007 is unsustainable in law. 8. The petitioner has strongly relied upon the judgment of FDC Ltd vs. UOI & Ors: 2007 (1) CLR 706 delivered by the Single Judge of this Court. As per petitioner, the present case is totally covered by the judgment as mentioned above which still remains good law and in para 9 of the judgment, similar propositions have been discussed and decided. 9. The next contention of the petitioner is that the impugned notificatioin is liable to be quashed because the respondent No.1 while passing the said order completely ignored the fact that the terminated managers are not workmen within the meaning of Section 2(s) of the Act as it is clear from the agreement betweent the shop managers and the company that they are fully responsible for all the managerial functions of the shop including the payment of salaries of the staff from the sale proceedings. They are accountable for the profits incurred and loss WP(C) No.7585/2007 Page 5 of 41 suffered by the shop, they are aware of the sale practice and secrets of the company. They are given the general control of the shop which a workman is never given. The managers apart from their salary which is about Rs.4.5 lac per annum also receive a certain amount of commission which a workman never receives. In support of above referred contention, the petitioner has referred to the case of Bata (India) Ltd & Ors vs. S.K. Chawla: (2005) III CLR 727 passed by Division Bench of Gujarat High Court. 10. The other reason given by the petitinoer is that it has more than one thousand shops, out of which only 220 shop managers have raised the dispute. The shops are located in different places in India and disputes have also arisen on different periods and are of different nature, the record of all these disputes are spread all over India and therefore there is no common issue which can be determined by the National Tribunal in view of the scheme of Section 7B(1) of the Act. 11. In the counter affidavit filed on behalf of respondent No.2, it has been stated that the petitioners had obtained permission of the Government of West Bengal, Karnataka, U.P., Delhi and Maharashtra under the Shops and Establishment Act of the respective States to keep their shops open for extended working hours and observe 7 days week which was opposed by respondent No.2, therefore, it appears that due to this disbobedience of their order, the petitioner company terminated the services of 220 employees without even holding any enquiry. 12. The main submission of the respondents on merit is that the WP(C) No.7585/2007 Page 6 of 41 reference under Section 10 (1A) of the Act to the National Industrial Tribunal has been rightly appointed by the Central Government as it involved termination of huge number of work-men throughout the country on identical grounds with an apprehension that further terminations may take place and may cause industrial dis-harmony in similar industries. The fact that a particular dispute is of national importance is based on the formation of an opinion by the Government and it is not open for the court to probe into the facts/material on the basis of which the subjective satisfaction is arrived at. Facts of the present case clearly show the involvement of question of national importance. 13. It is also stated that the reference to National Tribunal is justified, because each shop(s) in State(s) constitute different “establishment” under Section 2(j) r/w Section 2(ka) of the Act and an opinion was formed by the Government that the issue needed to be adjudicated by the Tribunal and accordingly a National Industrial Tribunal was constitued vide notification dated 05.09.2007 for adjudication in the matter of termination of 220 employees of Bata shop owners. 14. Learned Senior counsel Shri Ashok Desai, appearing on behalf of the petitioner, has made his submissions which can be outlined as under: (a) Firstly, Mr. Desai, learned Senior counsel, has submitted that the impugned order does not record the reasons as to how the Central Government arrived at the conclusion that the present dispute WP(C) No.7585/2007 Page 7 of 41 warrants the formation of National Tribunal. The said decision making, according to Mr. Desai, lacks requirement of satisfaction of pre-conditions of the Section 7 B of the Act only after which the Central Government can form the National Tribunal in a given case. (b) Secondly, Mr. Desai, learned Senior counsel, contended that the two preconditions prescribed under the Section 7 B of the Act are to be satisfied in order to enable the Central Government to arrive at the opinion of formation of National Tribunal. Learned Senior counsel has read the provision of Section 7 B and thus submitted that the said two preconditions are that the dispute involves question of national importance and secondly the industrial establishments in more than one State are likely to be affected by such dispute. Learned Senior counsel submitted that none of the criterion in the case are met with, as neither any question of national importance emerges in the present matter which ought to have been disclosed in the impugned order, nor the industrial establishments at more than one State are likely to be affected by such dispute. (c) Thirdly, learned Senior counsel Mr Desai has argued that the High Court has jurisdiction to entertain a writ petition in view of specific plea raised by the petitioner that there is no industrial dispute and if an administrative order was passed by not taking into consideration statutory requirement. The said order, if passed, is WP(C) No.7585/2007 Page 8 of 41 subject to judicial review. He referred the following decisions in support of his submission : I. In Nedungadi Bank Ltd vs. K.P. Madhvan Kutty & Ors.: (2000) 2 SCC 455, the Supreme Court held as under: “8. It was submitted by the respondent that once a reference has been made under Section 10 of the Act a Labour Court has to decide the same and High Court in writ jurisdiction cannot interfere in the proceedings of the Labour Court. That is not a correct proposition to state. An administrative order which does not take into consideration statutory requirements or travels outside that it is certainly subject to judicial review limited though it might be. High Court can exercise its powers under Article 226 of the Constitution to consider the question of very jurisdiction of the Labour Court. In National Engineering Industries Ltd. v. State of Rajasthan: (1999) 9 JT (SC) 377 this Court observed: “24. It will be thus seen that High Court has jurisdiction to entertain a writ petition when there is allegation that there is no industrial dispute and none apprehended which could be subject matter of reference for adjudication to the Industrial Tribunal under Section 10 of the Act. Here it is a question of Jurisdiction of the industrial dispute, which could be examined by the High Court In Its writ jurisdiction. It is the existence of the industrial tribunal which would clothe the appropriate Government with power to make the reference and the industrial Tribunal to adjudicate it. If there is no industrial dispute in existence or apprehended appropriate Government lacks power to make any reference.” WP(C) No.7585/2007 Page 9 of 41 II. In National Engineering Industries Ltd vs. State of Rajasthan: (2000) 1 SCC 371, the Apex Court held as under: “24. It will be thus seen that High Court has jurisdiction to entertain a writ petition when there is allegation that there is no industrial dispute and none apprehended which could be subject matter of reference for adjudication to the Industrial Tribunal under Section 10 of the Act. Here it is a question of Jurisdiction of the industrial dispute, which could be examined by the High Court In Its writ jurisdiction. It is the existence of the industrial tribunal which would clothe the appropriate Government with power to make the reference and the industrial Tribunal to adjudicate it. If there is no industrial dispute in existence or apprehended appropriate Government lacks power to make any reference. A settlement of dispute between the parties themselves is to be preferred…..” III. In Management of Express Newspapers (P.) Ltd, Madras vs. The Workers and Ors: AIR 1963 SC 569 (V 50 C 89), the Supreme Court held: “19. …..It is hardly necessary to emphasize that since the jurisdiction of the Industrial Tribunal in dealing with industrial disputes referred to it under section 10 is limited by S.10 (4) to the points specifically mentioned in the reference and matters incidental there to, 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…..” (d) Learned Senior counsel Shri Desai has also submitted that the present case does not involve the industrial establishments in more than one State and it involves only a single establishment which is the petitioner, in these circumstances, the second precondition fails WP(C) No.7585/2007 Page 10 of 41 on this very count, thus, the impugned order was passed completely ignoring this aspect. The said reference is thus bad as it illegal exercise of jurisdiction. (e) Learned Senior counsel strenuously argued that the present case is similar to the case decided by this Court reported in FDC Ltd vs. UOI & Ors (supra) wherein the learned Single Judge quashed the similar reference on this very basis that no question of national importance had emerged in that case and the industrial establishment in more than one State was not affected in that case. In that situation, the learned Single Judge of this Court while exercising his jurisdiction under Article 226 quashed the impugned order on the ground that the Central Government has completely ignored the provisions of the Section 7 B while referring the dispute to the National Tribunal in the similar situation and thus the present case being based on the same set of facts. The view expressed by the learned Single Judge of this court in FDC Ltd vs. UOI & Ors (supra) may be followed by this Court. (f) Further, the disputes of the petitioner with its managers are to be dealt with singularly and each case has its own merit and cannot be adjudicated in one shot in the manner of formation of National Tribunal as in each there is a separate grievance and there would be a great inconvenience to the parties if the National Tribunal is formed in the present case. Section 7B of the Act is a provision for special circumstances. On this count also, learned Senior counsel WP(C) No.7585/2007 Page 11 of 41 urged that the present dispute does not warrant the reference which has also been considered by the learned Single Judge of this Court in FDC Ltd vs. UOI & Ors (supra). (g) The learned Senior counsel has referred the decision of the Division Bench of the Gujarat High Court in Bata (India) Ltd & Ors vs. S.K. Chawla (supra), wherein it was held that the Bata Shop Managers are not the workmen. Further, it was held as under: “12. ……All these duties, which were ascribed to him and were also discharged by him, by no stretch of imagination can be said to be of clerical nature. Where a person is given authority to take independent decision in a particular manner in a particular matter, then, it cannot be said that he continues to be a clerical person and had no independent authority to take a decision. In the present matter, the respondent was appointed in the managerial cadre, was assigned duties of supervision and management and in fact, was discharging the said duties. At this stage, we would also be justified in referring to a judgment of the Supreme Court in the matter between S.K. Maini v. Carona Sahu Co. Ltd., reported in 1994 II CLR 359 S.C…..” It further held: “We have no hesitation in holding that the reference at the instance of the respondent, who was not a workman, was not maintainable.” 15. Learned Senior counsel, thus, summarized that no question of national importance is involved in the present case and therefore, in view of the same, the impugned order passed is bad and liable to be quashed as the Central Government/ respondent has exceeded its jurisdiction. The High Court has the power to consider the jurisdiction of Central WP(C) No.7585/2007 Page 12 of 41 Government and can quash the reference by allowing the present writ- petition. 16. Per contra, Mr. Sanjay Parikh, learned counsel appearing on behalf of the respondents, has made his submissions which can be enumerated as under: a) Learned counsel firstly argued that the impugned order passed by the Central Government under Section 7B of the Act is the administrative function and the petitioner‟s case before this Court that the Central Government has not considered that the managers are not workmen or that the petitioner‟s shops are not industrial establishments which are likely to be affected, is going into the merits of the controversy which is not warranted at the time of making the reference under Section 10 read with Section 7B of the Act. Thus, this Court should not interfere under Article 226 of the Constitution of India to make the enquiries which even the Central Government is not entitled to take into the material as suggested by the petitioner while referring the reference. Learned counsel relied upon the decision of Ramesh Kumar & Others versus Union of India: 144 (2007) DLT 394 (DB), wherein Division Bench of this Court held that at the time of deciding the question as to whether or not a reference is to be made, the appropriate government acts in the light of provisions of Section 10. Para 3 of the said judgment as under: “At the time of deciding the question as to whether or not a reference is to be made, the WP(C) No.7585/2007 Page 13 of 41 appropriate Government acts in the light of provisions of Section 10 of the Industrial Disputes Act. It is settled law that whether or not a reference case could be made out is an administrative decision and at that stage, no final opinion on the lis of the parties could be decided by the appropriate Government. In the present case, the appropriate Government has proceeded to decide the lis between the parties, as if they are vested with the judicial or quasi-judicial power. In our opinion, therefore, the rejection of the prayer of the workmen to make reference of the disputes is illegal and without jurisdiction. In this connection, we may refer to the decision of the Supreme Court in Telco Convoy Drivers’ Mazdoor Sangh and Another v. State of Bihar and Others, reported in AIR 1989 SC 1565. In paragraph 13 of the said judgment it has been held that while exercising power under Section 10(1) of the Act, the function of the appropriate Government is an administrative function and not a judicial or quasi-judicial function, and that in performing the said administrative function the Government cannot delve into merits of the dispute/claims and take upon itself the task of determining the lis, which would certainly be beyond the power and the scope of Section 10 of the Act. The same proposition of law has been reiterated in other subsequent decisions of the Supreme Court like Dhanbad Colliery Karamchari Sangh v. Union of India and Others, reported in 1991 SUPP.(2) SCC 10; V. Veeraranjan and Others v. Government of Tamil Nadu, reported in AIR 1987 SC 695; Ram Avtar Sharma v. State of Haryana, reported in AIR 1985 SC 915; Air India Limited v. Jagesh Dutt Sharma, reported in 133 (2006) DLT 93 (DB), and ITDC v. Delhi Administration, reported in 1982 Lab. I.C. 1309 (FB).” b) Learned counsel for the respondents refuted the contentions of the petitioners by stating that in the present case, the reference to the National Tribunal is called for as it involves termination of a huge number of workmen throughout the country on identical grounds. WP(C) No.7585/2007 Page 14 of 41 Thus, the grounds on which workmen are removed are not uncommon. The fact that a large number of workmen has been removed on all India basis makes it a question of national importance. c) Learned counsel for the respondents submitted in alternative, that the petitioner‟s shops, branches at several States constitute different establishment under Section 2(j) read with Section 2(ka) of the Act, thus, the argument of the petitioner that the different industrial establishment are not likely to be affected is completely baseless. Learned counsel relied upon the judgment of Food Corporation of India workers union Vs. Food Corporation of India and Others: (1985) 2 SCC 294 and SAIL & Others versus National Union Waterfront Workers & others: 2001 (7) SCC 1 wherein the said proposition has been laid down. d) Learned counsel for the respondents has further submitted that the petitioner and the respondents have entered into the settlement agreement on 25.09.1998 within the meaning of Section 18 of the Act. The said settlement between the management and the managers/ workmen is binding which clearly show the status of the managers as workmen who have been given due acknowledgement as workmen by the management. In Clause 12 of the said settlement, it was mentioned that the necessary changes and/or amendments made in the settlement shall be incorporated in the WP(C) No.7585/2007 Page 15 of 41 standing orders and rules will remain in force until the time the same are revised by mutual discussions. According to the learned counsel for the respondents, the settlement has a legal force as an award and is binding and Section 9A of the Act curtails the management‟s right to change the conditions of service of workman which are arrived at the settlement and even after the term of the settlement is over, its binding effect continues. He referred the judgment of the Apex Court in the case of LIC vs. D.J. Bahadur: (1981) 1 SCC 315, in support of his submissions. The standing orders issued by the petitioners to the managers of the petitioner also treat the shop managers/respondents as employees and not supervisors. The standing orders, thus, become a part of the settlement. The very fact that the petitioner had entered into a settlement with the respondents, therefore, their service conditions were governed by the standing orders conclusively shows the status of the Bata Shop Managers as workmen. e) It is averred that along with the counter affidavit, the respondent had enclosed the settlement as well as the standing orders though, in the rejoinder it was stated by the petitioner that the termination of services of individual managers was done as per the agreements and standing orders applicable to the managers. However, in the additional affidavit, it was stated that the standing