:-:-:- 1 -: 1 -: 1 -: HIGH HIGH HIGH COURT OF JUDICATURE AT BOMBAY COURT OF JUDICATURE AT BOMBAY COURT OF JUDICATURE AT BOMBAY CIVIL CIVIL CIVIL APPELLATE JURISDICTION APPELLATE JURISDICTION APPELLATE JURISDICTION LETTERS LETTERS LETTERS PATENT APPEAL NO. 212 OF 2002. PATENT APPEAL NO. 212 OF 2002. PATENT APPEAL NO. 212 OF 2002. Against WRIT PETITION NO. 4734 OF 1994. Walchandnagar Industries Limited, (Engineering & Foundary Division) Satara Road, Taluka : Koregaon, District: Satara. ..Appellant. Versus. 1. Dattusingh Lalsing Pardeshi, at Bhaktawadi, Post: Revadi, Taluka: Koregaon, Dist: Satara. 2. Shashikant R. Mantri, B-36, Kalidas Colony, Satara Road, District : Satara. 3. Ganpat Baba Jadhav, at Bhaktawadi, Post: Revadi, Taluka: Koregaon, Dist: Satara. 4. Smt. Leela Vijay Pawar, K-2/6, Pach Chawal, Co-operative Colony, Satara Road, Dist: Satara. 5. Mahesh Vijay Pawar, K-2/6, Pach Chawal, Co-operative Colony, Satara Road, Dist: Satara. ..RESPONDENTS. ALONG WITH. LETTERS LETTERS LETTERS PATENT APPEAL NO. 213 OF 2002. PATENT APPEAL NO. 213 OF 2002. PATENT APPEAL NO. 213 OF 2002. Against WRIT PETITION NO. 4730 OF 1994. Walchandnagar Industries Limited, (Engineering & Foundary Division) Satara Road, Taluka : Koregaon, District: Satara. ..Appellant. :-:-:- 2 -: 2 -: 2 -: Versus. Ibrahim Hanif Mulani, K-3/2, Pach Chawal, Co-operative Colony, Satara Road, Dist: Satara - 415 010. ..RESPONDENTS. Shri. A. V. Bukhari i/b Shri. R.L.Nerlekar for the appellant. Shri. S.M.Dharap for the respondents. CORAM: CORAM: CORAM: S.B.MHASE & S.B.MHASE & S.B.MHASE & D.B.BHOSALE, D.B.BHOSALE, D.B.BHOSALE, JJ. JJ. JJ. DATE: DATE: DATE: OCTOBER 20, 2005. OCTOBER 20, 2005. OCTOBER 20, 2005. ORAL ORAL ORAL JUDGMENT (PER S.B.MHASE, J.): JUDGMENT (PER S.B.MHASE, J.): JUDGMENT (PER S.B.MHASE, J.): 1. Both these Letter Patent Appeals are directed against the judgment and orders passed by the learend Single Judge of this court on 19th April 2002 in Writ Petitons Nos. 4730 of 1994 and 4734 of 1994. 2. Initially, 9 workmen who were employed with the appellant had filed ULP Complaint before the Member, Industrial Court at Kolhapur. However, all those complaints were dismissed by the Member, Industrial Court by a common judgment dated 22.7.1994. Out of these 9 workmen, 5 workmen have approached this court by filing the above referred two writ petitions. The ULP Complaint No. 112 of 1988 was filed by the respondent in Letters Patent :-:-:- 3 -: 3 -: 3 -: Appeal 213 of 2002. After the dismissal of the said complaint, the respondent in Letters Patent Appeal 213 of 2002 filed writ Petition No. 4730 of 1994. Since the said writ petition was allowed by the learned Single Judge by order dated 19th April 2002, the appellant has preferred Letters Patent Appeal No. 213 of 2002. Thus, it will be clear that the respondent in Letters Patent Appeal.No. 213 of 2002 is the Complainant in ULP Complaint NO. 112 of 1988, and the Petitioner in Writ Petition No. 4730 of 1994. ULP Complaint No. 123 of 1988 was filed by one Vijay Jagnnath Pawar. The respondent Nos. 4 & 5 to the Letters Patent Appeal No. 212 of 2002 are the legal representatives of the said Vijay Jagannath Pawar. Respondent Nos. 4 & 5 are continuting the litigation of the said ULP Complaint as the legal heir of said Vijay Pawar. ULP Complaint No. 132 of 1988 was filed by the respondent No.1, in Letters Patent Appeal No. 212 of 2002. ULP Complaint No. 185 of 1988 was filed by the respondent No.2, in Letters Patent Appeal No. 212 of 2002. ULP Complaint No. 189 of 1988 was filed by the respondent NO.3 in Letters Patent Appeal No. 212 of 2002. After the dismissal of all these complaints, the respondent Nos.1 to 5, as stated above, have jointly preferred Writ Petition No. 4734 of 1994 :-:-:- 4 -: 4 -: 4 -: against the comon order passed by the Member, Industrial Court, referred to above, from which the present Letter Patent Appeals arise. While disposing of the writ petition No. 4734 of 1994, the learned Single Judge of this Court, after disposing of the Writ Petition No. 4730 of 1994, has obseved that "for the reasons recorded in Writ Petition No. 4730 of 1994, Writ Petition No. 4734 of 1994 may be disposed of in terms of the orders which are stated separately." Thus it will be evident that both these Letters Patent Appeals arise from the common judgment, and therefore, we have decided to dispose of these Letters Patent Appeals by this common judgment. 3. At the outset, we point out that the appellant- Cooper Kamgar Sangh is a recognised union under the Industrial Disputes Act, 1947 and the MRTU & PULP Act, 1971. The respondent in Letters Patent Appeal No. 213 of 2002, namely, Ibrahim Hanif Mulani was/is not a Member of the recognised union. However, the respondent Nos.1 to 3 in Letters Patent Appeal No. 212 of 2002 and the deceased Vijay were/are the Members of the recognised union in the said Industry being the Cooper Kamgar Sangh. :-:-:- 5 -: 5 -: 5 -: 4. ULP complaints were filed by the respondent under Item-5 of Schedule-IV and Items-1 & 4 of Schedule-II of the MRTU & PULP Act, since the services of the respondents were terminated with effect from 5.2.1988 after the close of the working hours, in view of the settlement under Section 2(p) of the Industrial Disputes Act, 1947 arrived at between the appellant-management and the recognised Union dated 2.2.1988. The said settlement was the subject matter of challenge before this court. As a result of the said settlement, out of total 810 employees services of 492 employees were brought to an end and services of the 318 employees were retained on certain conditions. Out of 492 employees, only 9 employees had challenged the said act of termination of the services by filing the ULP complaints, as stated above. Out of 9 employees four employees and the legal representatives of one employee preferred above referred two writ petitions, as explained above. Those 4 employees and legal represntatives of the deceased employee are the respondents before this court. Suffice it to state at this stage that the rest of the employees have accepted the settlement dated 2.2.1988 and thereby the action of termination of their services, because of settlement dated 2.2.1988. :-:-:- 6 -: 6 -: 6 -: 5. The respondents have invoked items 1 & 4 of Schedule II and Item-5 of Schedule IV of the MRTU & PULP Act, 1971. So far as the order of the Industrial Court is cocnerned, the Industrial Court has held that the unfair labour practices under items-1 & 4 of Schedule-II have not been proved, much less the Industrial Court has found that there are no adequate pleadings constituting the said unfair labour pratice. Item-5 of Schedule-IV is about the show of favourtism or partiality to one set of workers, regardless of merit. However, on this count also the Industrial Court found that the respondents -Complainant have failed to prove unfair labour pratice because, no set of workers was pointed out to whom favourtism has been shown and/or partiality has been done by the employer. However, while allowing the writ petition, the learned Single Judge of this Court has held that the appellants have committed unfair labour pratice under item 4(c) of Schedule-II, since the settlement entered into on 2.2.1998 with the recognised union has, in fact, changed the seniority rating of the respondent - employees, because the juniors to the respondents have been retained in the service while the respondents have been retrenched. The learned Single Judge has :-:-:- 7 -: 7 -: 7 -: observed that this was done with a view to discourage the membership of the recognsied union. However, the learned Single Judge has also found that there was no unfair labour pratices committed by the appellant under item-1 of Schedule II and also under item-4(a), (b) and (d) to (f) of the MRTP & PULP Act, 1971. 6. So far as Schedule-IV of the said Act is concerned, the learned Single Judge has found that the appellant has violated the provisions of Section 25-N, & 25-G of the Industrial Disputes Act and so also the mandatory provisions of Rule- 81 of the Industrial Disputes (Bombay) Rules, 1957. The Single Judge has found that the management does not have the right to terminate the services of the workmen on the basis of settlement who are not the members of the said union. With reference to Section 20(2)(b) of the MRTU & PULP Act, the learned Single Judge found that the settlement dated 2.2.1988 relating to the termination of these employees by retaining their juniors cannot be held to be valid and the clause relating to the termination of the respondents’ services must be severed from the rest of the settlement. Thus, the learned Single Judge having found that there was no compliance of Sections 25-N & 25-G of the Industrial Disputes Act, has ultimately :-:-:- 8 -: 8 -: 8 -: found that that part of the settlement which deals with the termination of the services of the respondents is not valid and severed that part from the rest of the settlement. 7. Thus, it will be noticed that even though the settlement has been partly held to be valid to the extent of retaining the services of 318 employees and yet that part of the said settlement dealing with the termination of services of the 492 employees, including the respondents has been held to be not valid. However, the learned Single Judge has not recorded any finding on the issue of unfair labour pratice under which item it falls. Since the said unfair labour pratice falls under item 1 of Schedule-IV. This is necessary to be mentioned at this stage because there was no complaint under item 1 of Schedule IV before the Member, Industrial Court. However, since the findings as recorded by the learned Single Judge have ultimately culminated in allowing the ULP complaints giving benefit of the reinstatement and/or monetary benefits till the date of superannuation or retirement, it has become necessary for us to scrutinise the said reasoning and the findings of the learned Single Judge. The learned Single Judge has also recorded a finding that :-:-:- 9 -: 9 -: 9 -: the appellant has indulged into unfair labour pratice under item-5 of Schedule-IV of the MRTU & PULP Act by retaining 318 workmen as against 492 they being terminated regardless of merit. Thus, the learned Single Judge has held violation of Section 25-N, 25-G of the Industrial Disptues Act, 1947 and Rule-81 of the Industrial Disputes (Bombay) Rules and unfair labour pratice under item-5 of Schedule-IV and item 4-C of Schedule-II of the MRTU & PULP Act, 1971. 8. The other relevant facts are as under. . The Appellant - Walchandnagar Industries Limited, Engineering and Foundry Division, Satara Road is the employer at present. Originally, the appellant’s factory was owned by Cooper Engineering Limited, which had divisions at Satara Road & Chinchwad. In the year 1964, there was an award by the Industrial Tribunal, Bombay regarding bifurcation of the accounts of the Satara Road and the Chinchwad units. In this industry, Cooper Kamgar Sangh and Engineering Mazdoor Sangh are two trade unions, separately registered. Cooper Kamgar Sangh is registered in the year 1965 and was a recognised union since prior to 1971. It was also recognised under the MRTU & PULP Act, 1971. However, Cooper :-:-:- 10 -: 10 -: 10 -: Kamgar Sangh was representing the workers of the appellant factory since beginning and it was a recognised union under the Act. The appellant and the said Cooper Kamgar Sangh had settlements in respect of the Lay-off and Retrenchment on 21st January 1971. The said Cooper Engineering Limited was merged with the appellant - Walchandnagar Industries Limited on 26th February 1981 under the order of the High Court of Bombay passed in Company Petition No.178/79 and since then appellants are employers. There was a settlement dated 2.2.1988 in between the appellant and the Cooper Kamgar Sangh which was executed after the deliberation between the parties. The said settlement dated 2nd February 1988 is a subject matter of the present challenge. As a result of the said settlement, the services of the Respondent -employees were brought to an end with effect from 5.2.1988 alongwith the 492 employees and the employment of the 318 employees was retained on certain conditions. Out of the total 492 employees as stated above, only 9 employees have challenged the said settlement, as stated in the earlier paragraphs. Out of them, only present respondents have continued the litigation. The rest of the employees have accepted the said settlement. Out of 492 employees whose services have been brought to an end, 479 :-:-:- 11 -: 11 -: 11 -: employees were/are the members of the Recognised Union, namely, Cooper Kamgar Sangh and only 13, employees were/are belonging to the category of non-members of the recognised union. Out of those 13 non members of the recognised union, only one employee the respondent in Letters Patent Appeal No. 213 of 2002, namely, Mr. Mulani, has challenged the said settlement. It is further to be noted that out of 318 employees who were retained in service, 303 employees are the members of the recognised union and 15 employees were not the members of the recognised union. Thus, it will be seen, on the facts that out of the total 810 employed persons, 782 were the members of the recognised union and only 28 persons were not the members of the recognised union. Out of these, only one person, who is not the member of the recognised union, has challenged the settlement. The Respondents in Letters Patent Appeal No. 212 of 2002 were/are the members of the recognised union. It is further to be noted that this settlement dated 2.2.1988 though signed in between the representatives of the employer, on one hand and the representatives of the workmen on the other hand, namely, the appellant and Office bearers of the Cooper Kamgar Sangh respectively, is an outcome not only of discussions and deliberations arrived at between the :-:-:- 12 -: 12 -: 12 -: employer and the recognised union, but is an outcome of deliberations and sanction brought about with the active participation of the members of the recognised union. On reading the Preamble Part, it will be evident that though the Office bearers of the recognised union had deliberation with the employer and have arrived at the terms of the settlement, the Office bearers of the said union have not themselves accepted and signed the settlement immediately. Since the effect of the said settlement was to bring to an end the services of 492 employees and also freezing the benefits of 318 employees, the recognised union thought it fit to place the said settlement before the General Body of the Union. And, accordingly the General Body Meeting was held on 22nd January 1988. In the said General body Meeting of the the recognised union, naturally all the members of the said union were expected to participate and this settlement along with annexures- I & II were placed for the approval of the General Body Meeting. Annexure-I was containing the list of the workmen whose services were retained by the appellant - employer on certain conditions as showed in Column No.2.1 to 2.9, etc. The Annexure-II contained the list of 492 workmen whose services were to be brought to an end by the said settlement. :-:-:- 13 -: 13 -: 13 -: Thus, it was evident that the said settlement along with the list of the employees to be retained and the employees whose services were to be brought to an end had been placed before the General Body on 22nd January 1988. The said General Body Meeting had approved the said settlement and accordingly by a letter dated 23rd January 1988 (bearing No. 880/25/01,) the recognised union informed the management of the appellant about the approval of the said settlement. Thereafter on 2nd February 1988 the said settlement was signed by the representatives of the employer and the recognised union. 9. It is further to be noted that, it appears from the settlement that this was executed between the parties, to avoid an inevitable closure. Part-I of the said agreement shows the facts, circumstances and the cause or causes for effecting the said settlement. It is revealed that in the past Engine and Foundry Division of the appellant (Erstwhile Cooper Engineering Limited located at Satara) had employed around 3,000 employees and it came into grip of sever recession for its products such as agricultural pump sets, power looms, etc since 1970 - 1971. Since the industry suffered recession, in consultation with the recognised union, the measures :-:-:- 14 -: 14 -: 14 -: were initiated which included 5-day working in a week, stoppage of incentives scheme, 45 days of lay-off and 60 working days leave of absence for the 600 workmen. The workmen scarifcied one day’s wages in a working week. However, there was no improvement. Therefore, there were further negotiations with the recognised union and there was a scheme under which 200 employees resigned and 400 workmen were retrenched. Simultaneously, the employer made efforts to secure a jobbing orders for castings for foundry and jobbing machining which included BARC job work. However its main business remained slack and faced grave financial problems. Therefore, in order to meet the extra-ordinary situation, the erstwhile Cooper Kamgar Limited approached the Industrial Reconstruction Corporation of India in October 1972 and a reconstruction loan was sanctioned during the financial year 1972-73. During the year 1973-74, Engine & Foundry Division received two major business orders for about 5000 pumps from Bangladesh and 1536 power-looms from Marathwada Development Corporation. In order to fulfil these orders 600 employees, who had earlier resigned and retrenched were re-employed. These orders were complied by the end of 1974. However, usual domestic business did not revive, thereby :-:-:- 15 -: 15 -: 15 -: necessitating for the search of new business opportunities and simultaneous measures for cost reduction, including man power rationalisation, were found necessary. Therefore, efforts were made, and in 1974, 4 cylinder automotive diesel engine was developed for OEM application and to facilitate its production and to execute automotive jobbing castings, modernisation of the Light Foundry was done. But, the demand for 4 cylinder Diesel Engine picked up only from 1977-78. As a planned scheme for revival of the EFD the erstwhile Cooper Engineering Limited was merged with Walchandnagar Industries Limited with effect from April 1978. The appellant had placed the funds amounting to Rs.14 crores for the purpose of capital expenditure, working Capital so also to cover up the continuous losses. In order to secure the sustained market during the same period 3 cylinder engine and 4 cylinder higher H. P. diesel engine were developed. So also efforts were made to manufacture medium duty shapers and fabrication work for sugar/cement machinery. The demand for multi cylinder diesel engine for want of sustained business considerably reduced in Mid-1983. Therefore, plans were drawn for manufacture of Sophisticated 1200 CC light weight, fuel efficient diesel engine for passenger cars and a collaboration :-:-:- 16 -: 16 -: 16 -: agreement was signed with M/s. Technoliccence, U.K. for manufacture of light weight, advanced 4 cylinder diesel engine of M/s. Fratelli Negri Maschhine Diesel Sud SRL (Italy) design, in 1983-84. However, the said plan could not work out since the development and commercialisation involved import of certain critical items and while the same were in process of being sorted out, the appellant faced severe liquidity problems arising out of the delayed purchases, business recession and making it difficult to proceed with manufacture of the proposed fuel efficient, light weight FNM diesel engine and therefore the project was sold to M/s. Premier Automobiles Limited, Bombay. The machine and tool division at Chinchwad was also sold to Premier Automobiles. During this period, the management of the EFD and Union were in continuous dialogue and the efforts were made for exploring newer business opportunities, as stated above, and also for the cost reduction including the manpower rationalisation, in the year 1976, 1979, 1983 and 1986, in the form of Voluntary Retirement Scheme being introduced and reduction of man power strength was achieved. Since the efforts made for securing the adequate business had not materialised to the desired results, the EFD was forced to declare 5 days working week effective :-:-:- 17 -: 17 -: 17 -: from December 1986. There was reduction of business, continuous cash loss and consequent liquidity problem and, therefore, various payments of the suppliers, employees could not be made promptly in 1987. From August 1987 payment of electricity bills could not be made. With the result, effective from 17th December 1987, MSEB discontinued the supply of power. In the meantime, from 1st December 1987 only 3 days working per week was introduced as a consequence of depleted order book. With the discontinuation of power supply the operation of the EFD virtually came to a grindling halt. It is further to be mentioned that during this period, the management of the EFD has been negotiating with the Cooper Kamgar Sangh, the recognised union, on several bilateral issues of workmen and there were settlements entered into between the employer and employees on 16.1.1974, 3.2.1980 and 9.2.1986. Thus, from the above causes it will be clear that the activity of the EFD of the appellant at Satara Road had virtually come to stand still. Therefore, to avoid closure, the settlement dated 2.2.1988 was executed. 10. By this settlement, it was made aware on the either side that this is an effort to avoid closure and that it is an ultimate effort to save the :-:-:- 18 -: 18 -: 18 -: EFD from otherwise inevitable closure. This settlement makes a provision for 318 employees who were retained and 492 employees whose services were brought to an end. It was agreed that the production activity in respect of castings, proof machining and jobbing machining would be continued on an understanding that the minimum production of 125 MT of net good castings and production of value added of Rs. 2 lacks of jobbing machining would be achieved per month. For achieving the said production level, the number of workmen (including clerical / technical workmen) to be retained were 318. The categories of workmen as well as individual workmen to be retained for the above production level were determined by the management of EFD and categories and names of such workmen were as per Annexure-I to the Settlement. The wages, salaries and the benefits including the allowances (HRA, conveyance allowance) of the retained workmen were re-adjusted to 85% of the wages and salary of the month of January 1988 at the level of production of 125 tonnes of net good castings and jobbing machining of value added of Rs.2 lacks per month; Dearness Allowance would stand frozen at the level which was payable in the month of January 1988, for a period of 18 months, at the end of which parties would review the situation. The re-adjusted :-:-:- 19 -: 19 -: 19 -: salaries, as stated earlier and wages would be subject to upward change only with increase in production, as shown in the chart incorporated in the said settlement. It was further agreed that till the production of machine jobbing increase, as per the chart stated in the settlement, the basic wages and Dearness Allowance etc would remain same as before. No payment towards any production incentive except shown in the chart would be paid. 11. So far as the bringing to an end the relationship of the employer and employee of 492 workmen was concerned, their names were reflecting in Anexure-II and it was agreed that these workmen would be paid final dues as under:- a) Gratuity as per the Payment of Gratuity Act. b) Benefit / Compensation - as shown in the table below. TABLE (A) 15