1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO.7688 OF 2008 Menon Bearings Limited and another ..Petitioners. Vs. Bharatiya Kamgar Karmchari Mahasangh ..Respondent. .... Mr. M.S. Topkar for the Petitioners. Mr. R.S. Pai i/b M/s. Sanjay Udeshi & Co. for the Respondent. .... CORAM: DR. D.Y. CHANDRACHUD, J. 26th November, 2008. ORAL JUDGMENT : 1. Rule, by consent of the learned counsel made returnable forthwith. Counsel appearing for the Respondent waives service. With the consent of the learned counsel, the matter is taken up for hearing and final disposal. 2. The Petitioner is engaged in the manufacture of bearings for automobiles and is a supplier to automobile manufacturers. A settlement was entered into on 9th April, 2006 with the recognized union under which a graded scale of incentives came to be provided 2 to the workmen. The minimum incentive of Rs.4,800/- per month is based on a cost of production of Rs.160 lacs whereas the maximum incentive of Rs.11,700/- is based on a cost of production of Rs.230 lacs. The other clauses of the settlement including Clauses 8, 11, 12 and 13 provide for working out the terms agreed upon by the parties for the payment of incentives. Under Clause 11 it has been stipulated that the minimum incentive is based on a manpower strength of 132 persons and the existing complement of machinery. Clause 12 provides that in the event that the workers do not achieve the production norms and the employer has to engage additional work force, the payments to the additional workers shall be adjusted against the incentives. Clause 13 specifically recognizes that the management was contemplating the installation of modern machinery to meet the demands of its customers. 3. In pursuance of the settlement, incentives have admittedly been paid to the workers. The incentive charts have been prepared in consultation with the office bearers of the union and are signed on behalf of the management and the union. During the period between 3 January 2007 and May 2008 the incentives have ranged between Rs.4,481/- for the month of September 2007 and Rs.11,133/- for the month of May 2007. The incentives paid are as follows : Months Incentives paid (in Rs.) January 2007 7476.11 February 2007 7892.4 March 2007 10335.08 April 2007 10990 May 2007 11133 June 2007 10920.16 July 2007 4917.6 August 2007 4630 September 2007 4481 October 2007 6253 November 2007 9191 December 2007 9910 January 2008 10483.82 February 2008 6473 March 2008 6843.31 April 2008 5302.76 May 2008 6686.25 4. On 28th May, 2008 a letter was addressed to the management by the First Respondent union informing the management that the majority of the workmen have become 4 members of the union and calling upon the union not to negotiate or settle any dispute with any other union or organization. By another communication a list of protected workmen was intimated to the management. It is not disputed that the list of protected workmen contained the names of the office bearers of the erstwhile union who had entered into the settlement. According to the management the communication of 28th May, 2008 was received on 10th June, 2008. 5. A complaint of unfair labour practices was filed under items 1(a) and 1(b) of Schedule II and items 9 and 10 of Schedule IV of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 by the union. The grievance in the complaint was that the management was not paying incentives to the workmen as agreed and that machinery was being removed from the factory premises. The substantive relief which has been sought is an injunction restraining the management from terminating the services of the workers without due process and from closing or locking out the company without following due process of law. The management was sought to be injuncted from removing the raw 5 material, goods, plant and machinery and a mandatory order has been sought for the restoration of the machinery which has been removed from the premises. On an application for interim relief, an ex parte ad interim order was passed on 9th June, 2008 directing the management not to terminate the services of its permanent workers except by following due process and injuncting it from removing the machinery lying in the premises. By the impugned order the Industrial Court has restrained the management from removing the machinery with a direction that the workers be allowed to work on the machines and that the services of the workmen should not be terminated except by following due process of law. 6. Counsel appearing for the Petitioner urged that the figures of incentives which have been disclosed at Exhibit L to the Petition, (more particularly summarized in the earlier part of this judgment) would reveal that the management has duly effected payment of incentives between January 2007 and May 2008 in addition to the payment of wages to the workers as agreed upon in the settlement. Learned counsel submitted that though the management had 6 removed old machinery from 2006 until date (more particularly described in Exhibit A-1 to the Petition), new machinery has been brought into the premises (described in Exhibit A-2 to the Petition). Learned counsel urged that there was absolutely no intent to terminate or retrench any worker and over the last 16 years no employee has either been retrenched or terminated. Moreover, it was submitted that faced with an intensely competitive industry, the management has to continuously adapt itself with the demands made by its customers and Exhibits A-1 and A-2 to the Petition would show that though 13 items of machinery were removed from 2006, as many as 24 machines were installed during the same period to meet the nature of the demand. Finally, it was submitted that the Industrial Court was palpably in error in coming to the conclusion that there is a breach of the settlement. 7. On the other hand Counsel appearing for the Respondent union sought to support the order passed by the Industrial Court. 8. Prima facie, at this stage there is merit in the submission 7 which has been urged on behalf of the Petitioner that the Industrial Court was palpably in error in granting interim relief. The settlement, as noted earlier, contemplates a graded scheme of incentives based on production. The settlement provides for a minimum and the maximum. The figures which have been disclosed in Exhibit L to the Petition and more particularly summarized in the earlier part of the judgment would at least prima facie indicate that in compliance with the settlement, incentives have been paid to the workers. An incentive by its very nature cannot be a fixed sum when it is relatable to productivity. The nature and quantum of incentives paid would ex facie belie the apprehension of the workers that the management has been acting in breach of the settlement. At the present stage, there was no material whatsoever before the Industrial Court to indicate that the replacement of the machinery was relatable to a variation in the quantum of incentives. While the employer has removed certain items of machinery – more precisely 13 machineries from 2006, as reflected in Exhibit A-1 to the Petition, as many as 24 new machines were installed during the same period as described in Exhibit A-2. The management has allayed the apprehension that there would be 8 any retrenchment or termination by stating before the Court that no workman would be terminated save and except by due process of law. The statement is accepted. The direction contained in the order of the Industrial Court injuncting the management from removing the machinery was clearly not warranted. A prima facie case in regard to the breach of the terms of the settlement has not been made out nor is there a prima facie case that there was any unfair labour practice on the part of the employer. The union would have to make out its allegation that there was a breach of the settlement by adducing evidence at the trial of the complaint. On the state of the record as it stands, no case for the grant of interim relief has been made out. The impugned order of the Industrial Court dated 28th July, 2008 was unsustainable. 9. The Industrial Courts ought to be careful in passing interlocutory orders of the nature that has been passed in the present case. Injuncting the employer in facts such as the present from replacing machinery would only result in a situation where the employer would be precluded from taking necessary steps to replace 9 obsolete machinery to keep pace with the demands of a rapidly changing market. The Industrial Courts, in passing such interlocutory orders, should be conscious of the fact that an employer in a competitive industry has to meet the demands of a competitive business environment. Interim orders that have the effect of precluding the employer from adapting to the demands of the market by installing new machinery are liable to seriously impede the competitive position of the business and ultimately lead to a destruction of the industry. Such a consequence would neither be in the interest of workers or the management. These observations are necessary in order to caution the Industrial Courts that interlocutory orders must be passed after a great deal of reflection and the remedy which was provided should not ultimately be destructive of the industry itself. 10. For all these reasons, the order which was passed by the Industrial Court is unsustainable and will have to be set side. The impugned order dated 28th July, 2008 is set aside. However, the statement of the Petitioner that the services of the workers shall not 10 be terminated save and except by following due process of law is accepted. The Petition is disposed of in these terms. In the circumstances of the case, there shall be no order as to costs. *****