SCA/9320/2008 1/43 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 9320 of 2008 For Approval and Signature: HONOURABLE MR.JUSTICE K.M.THAKER ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================================= NATIONAL LABOUR UNION THRO PRESIDENT-MANTRI - Petitioner(s) Versus KANSAI NEROLAC PAINTS LTD. - Respondent(s) ========================================================= Appearance : MRS YOGINI V PARIKH for Petitioner(s) : 1, SERVED BY AFFIX.(N) for Respondent(s) : 1, MR KM PATEL for Respondent(s) : 1, MR.VARUN K.PATEL for Respondent(s) : 1, ========================================================= CORAM : HONOURABLE MR.JUSTICE K.M.THAKER Date : 11/08/2008 ORAL JUDGMENT In this petition, the petitioner, a Labour Union has challenged an order dated 13.6.2008 (hereinafter referred to as the impugned order) SCA/9320/2008 2/43 JUDGMENT passed below Exh.39 by Industrial Tribunal, in Reference (IT) No. 132 of 2007. 1.1. The said order is under challenge to the extent the Tribunal declined to grant interim relief/stay against the transfer orders dtd. 23.4.2008 (hereinafter referred to as the “subject orders”) passed by present respondent, a Public Limited Company, transferring members of the Union to Babal, Haryana. 1.2. Aggrieved by the said transfer orders, the petitioner Union filed the above referred Reference No. 132/2007 and in the said Reference proceedings the petitioner Union also preferred an application Ex. 39 praying for an interim relief/stay against such transfers. After considering the material on record and the rival submissions of the contesting parties, the learned Tribunal passed the impugned order whereby it granted interim relief/stay in respect of certain employees (members of the petitioner-Union) who, according to the opinion of the tribunal are workmen within the meaning of said SCA/9320/2008 3/43 JUDGMENT term under Section 2(s) of the Industrial Disputes Act, 1947 ('the Act' for short) whereas in respect of about 16 persons, who, in prima facie view of the Tribunal, have to establish that they are in the category of workman, such interim relief/stay is not granted. It is against the said refusal of interim relief in respect of the 16 persons (hereinafter referred to as 'concerned persons') that the petitioner has approached this Court. 2. Heard Mrs. Parikh for the petitioner Union and Mr. KM Patel, Senior Counsel with Ms. AK Patel for the respondent company. 3. Mrs. Parikh submitted that the transfer orders impugned before the learned tribunal are malafide and they, essentially, are a subterfuge for closing down the establishment at Vatva and that therefore the same ought not be allowed. 3.1. She also submitted that though the employer has passed the orders ignoring that when the concerned persons took up the employment their SCA/9320/2008 4/43 JUDGMENT service conditions did not contain any provision regarding transfer. She also submitted and that a term/provision injected subsequently cannot be implemented or used against the concerned persons for transferring them from Gujarat to Haryana more particularly when the unit at which the concerned persons are sought to be transferred was not in existence when the petitioners came to be appointed. 3.2. Mrs. Parikh further submitted that when the learned tribunal was pleased to find justification in staying the transfer orders in respect of other employees, there was no justification in not granting similar relief in respect of the concerned 16 persons. Any other contention has not been raised. Mrs. Parikh relied upon the judgment of the Hon'ble Apex Court in the case between M/s. Kandan Sugar Mills Vs. Ziyauddin & Others, reported in AIR 1960 SC 650 and the judgment of Hon'ble Kerala High Court reported in the case of Joseph vs. Mathruboomi Printing & P.Co.Ltd. 1991(1)LLJ 359. 4. On the other hand, Mr. Patel at the outset SCA/9320/2008 5/43 JUDGMENT raised a preliminary objection regarding maintainability of the petition and submitted that the petitioner has approached this Court at an interlocutory stage and the learned tribunal has exercised discretion in declining to stay operation of transfer orders. He also submitted that the order of the Industrial Tribunal, so far as the relief is refused in connection with concerned 16 persons, is just and proper and does not warrant any intervention by this Court. 4.1. He further submitted that transfer is one of the existing service conditions of the concerned persons and when the company issued the subject transfer orders the respondent merely implemented the existing service condition and that therefore there was no justification for the learned Tribunal to stay the operation of such transfer orders. 4.2. Mr. Patel further submitted that the allegations regarding malafides are absolutely baseless and unjustified and that in absence of any evidence the learned tribunal is justified in not SCA/9320/2008 6/43 JUDGMENT accepting the unsubstantiated allegations about malafides and the Industrial Tribunal could not have passed any order on the basis of mere allegations at this interlocutory stage. 4.3. Mr. Patel, countering the petitioner's submissions based on the judgment relied upon by Mrs. Parikh, submitted that the ratio is not applicable in present case because the facts of present case are materially different from the facts of the said judgments. Mr. Patel also relied upon the judgments reported in (1976) 3 SCC Page 327 and 1970 (11) GLR Page 827 and also on the judgment of the Hon'ble Apex Court in the case of Management of Cipla Ltd Vs. Jayakumar R & Anr., reported in 1998 LLJ Page 54. Mr. Patel submitted that the compelling reasons for shifting the Vatva unit and consequent transfer of the concerned persons are expressly mentioned in the notice dated 28.9.2007 and in light of the said reasons it become clear that the allegations about malafides are unjustified and without any basis. 4.4. He, without prejudice to other contentions SCA/9320/2008 7/43 JUDGMENT also submitted that the concerned persons are not in the category of workman and therefore the proceedings are not maintainable and consequently Ex. 39 is not maintainable. He requested to reject the petition. 5. On perusal of the impugned order it becomes clear that the impugned order is an interim order and has been passed in exercise of discretion. On examination of the impugned order, the exercise of discretion by the learned Tribunal, appears to be based on just and legally valid reasons and is neither arbitrary nor it is on any irrational grounds. In this view of the matter also the petition does not deserve to be entertained and this Court is not inclined to entertain the petition against an interim and discretionary order by which the learned Tribunal has declined to stay the operation of transfer orders qua the concerned persons. This Court normally would not interfere with interim and discretionary order unless the exercise of discretion is arbitrary or irrational or against well-established legal position. SCA/9320/2008 8/43 JUDGMENT 5.1. It is also required to be taken into account that ordinarily Court would not stay operation of transfer order and in present case the learned tribunal has refused to stay the transfer orders for an additional reason also viz., until it is satisfied about the maintainability of the proceedings qua the concerned 16 persons and the status of the concerned persons i.e. whether they are, or are not, in the category of workman. When the learned tribunal has declined to stay the transfer orders also on such ground, then it cannot be said that the tribunal has committed any error in refusing to stay transfer orders at this stage. Thus, this petition, does not deserve to be entertained, more so when the status of the concerned persons on which depends the maintainability of the proceedings is yet to be established. However, since the case touches the work-life of almost 16 persons, this Court thinks that it is in the interest of justice to consider the factual aspects with a view to examining whether the claim for stay of operation of transfer order at all deserves to be granted. SCA/9320/2008 9/43 JUDGMENT 5.2. Before examining the factual aspects, it deserves to be mentioned that the Industrial Tribunal has recorded that before any evidence is let-in, which may help in deciding the issue as to whether the concerned persons are in the category of workman or not, it is neither proper nor justified for it to pass an order staying the operation of the transfer orders, more particularly when the promotion orders of the said persons contain a specific provision regarding transfer. The said 2 reasons for refusing to stay the operation of transfer order are good and strong reasons and the tribunal is justified in not staying the operation of transfer orders at this stage in face of the said situation, which calls for sufficient evidence before taking the decision. 6. So as to address the contentions and claim of the petitioner, it is necessary to take into account certain facts on the basis of which the petitioner has made the allegations against the subject orders and in background of which the order of Tribunal is challenged. SCA/9320/2008 10/43 JUDGMENT 6.1. It is the case of the petitioner that the concerned 16 persons originally joined a company named Saurashtra Paints Ltd., which had come into existence in 1973 and subsequently the name of the said company was, upon merger in accordance with applicable law, changed to 'Nerolac Paints'. The petitioner claims that despite merger and change in the management and ownership of erstwhile company, the service conditions of the concerned 16 persons remained unchanged. The petitioner has further asserted that somewhere in November 2004, a settlement was arrived at between the Company and the Union whereby it was agreed to not make any transfers outside Vatva Unit. It is also claimed that thereafter in 2007 the name of the company was again changed to 'Kansai Nerolac Paints Ltd', and at that time also the service conditions of the workman remained unchanged. 6.2. Then, in September 2007 the respondent company displayed a notice declaring its decision of shifting the Vatva unit to Babal, Haryana and to transfer the workman to the Plant at Babal, Haryana. SCA/9320/2008 11/43 JUDGMENT The petitioner also claims that in pursuance of the said notice the respondent-company stopped assigning any work or duties to the workmen at Vatva unit. 6.3. It is in light of such fact situation that this Court has to examine as to whether the decision of the tribunal to not grant stay against the transfer orders deserves to be interfered with and as to whether the petitioner has made out any exceptionally strong case to interfere with the impugned order and thereby for relief of stay against the transfer orders. 7. In backdrop of these facts, the transfer orders are challenged on ground of (1) lack of authority, and (2) malafides. The ground of lack of authority comprise two limbs viz. (a) at the time of their entry the service conditions did not contain condition of transferability, and (b) they cannot be transferred to a unit which did not exist at the time of their entry. The second ground rests on the allegation that the transfer orders are actuated by malafide intention inasmuch as the company wants to SCA/9320/2008 12/43 JUDGMENT pave the way to close down the Vatva unit. For the sake of convenience, the contention based on the allegation of malafides is considered first. 7.1. Actually, a case based on the allegations of malafides can be considered and decided after satisfactory evidence is brought on record to substantiate and/or rebut the allegations. 7.2. However, in present case, the petitioner has vehemently advanced the contention of malafides without even leading any evidence establishing malafides, and the petitioner expects that the transfer orders should be stayed on ground of malafides. 7.3. The petitioner, to support the submissions regarding closure, has placed reliance on an order dtd. 28.3.2008 passed by the Industrial Tribunal below Ex. 12 restraining the company from disposing the assets and on that basis it is claimed that the learned Tribunal has held that the “closure” is illegal. Aditionally, reliance is also placed on a notice dtd. 3.10.2007 by Government Labour Officer. SCA/9320/2008 13/43 JUDGMENT It is claimed that the said notice dtd. 28.9.2007 by the Company is construed as “closure” by the G.L.O. also and a notice dated 3.10.2007 has been issued calling for explanation from the respondent company with regard to its notice dated 28.9.2007. 7.4. On the basis of the notices dated 28.9.2007(by the Company) and dtd. 3.10.2007 (by GLO) and the order dtd. 28.3.2008, it is claimed that the impugned transfer orders are issued for carrying out the agenda of closing down the Vatva unit. 7.5. The interlocutory order dated 28.3.2008 (Pg.303 to 320 Annex 'O') of the learned Industrial Tribunal below Ex.12 restraining the respondent company from disposing the assets, cannot be construed to mean that the Court has arrived at any conclusion or findings on merits to the effect that the respondent has effected or is effecting closure and/or that the closure is illegal. Since the evidence of the respondent has yet not come on record there is no explanation regarding the attending circumstances of the said notices and to SCA/9320/2008 14/43 JUDGMENT draw support from the said material the respondent appears to be misconstruing or conveniently reading the said notices. The order below Exh.12, which is another interim order, appears to have been passed to protect the ultimate interest of the persons who undisputedly are in the category of workman. 7.6. Similarly, on perusal of the notice dtd. 28.9.2007 also it is not possible to hold, at this stage and without anything more (i.e., merely on reading of the notice and in absence of any other evidence) that the respondent company has effected or is effecting closure of the unit, more particularly when the respondent has offered various measures, including conveyance, transportation and settlement expenses, loan/advance etc. so as to facilitate the transfer. 7.7. As a last or desperate effort, the petitioner also relied on the notice dtd. 3.10.2007 by G.L.O. On perusal of the said notice it comes out that the officer has asked the respondent to show cause as to why its action of shifting the unit should not be treated as “closure”. The said notice SCA/9320/2008 15/43 JUDGMENT cannot be read to mean that it reflects conclusion of the competent authority that the company is effecting closure of the Vatva Unit as claimed by the petitioner. 7.8. Apart from the aforesaid, neither the notice dtd. 28.9.2007 nor the notice dt. 3.10.2007 can be, at this stage i.e. before the parties lead evidence to place on record the circumstances surrounding the said notices, taken as conclusive proof evidencing that the company has effected or is effecting closure. More particularly when the respondent, on the other hand, claims that the company is actually shifting the unit due to compelling economic and market oriented reasons which are clearly spelt out in the notices. The respondent company claims that the petitioner calls the action bad however it is not so and in reality the action is for survival and the respondent has adopted a lesser evil from amongst the two options viz., closure or shifting of the unit. It can be seen that even the defence submission is also based on fact-in-dispute and can be examined only in light of evidence. SCA/9320/2008 16/43 JUDGMENT 7.9. Thus, at this stage, the petitioner is neither right nor justified in claiming that the G.L.O. and the tribunal have held that the respondent company has effected closure. 7.10. The factum of closure is a matter of evidence and has to be proved by leading cogent evidence and it cannot be readily inferred. Undisputedly, no evidence has been yet let-in. Actually, it is disclosed during the hearing that the petitioner Union has not even raised any dispute in respect of alleged closure has not been referred. 7.11. Further, even in the subject reference, i.e., Reference (IT) No. 132 of 2007 also, the petitioner has not made any prayer in connection with alleged closure and any issue regarding closure has not been referred/included in the subject order of reference. While considering the petitioner's said submission, the respondent's explanation also will have to be taken into account. The submissions of the respondent are also based on assertion of factual aspects which are yet to be proved and the SCA/9320/2008 17/43 JUDGMENT respondent's explanation and submission can be examined and tested only after the evidence is let- in. 7.12. Thus, this Court would rather refrain from expressing any opinion regarding alleged “closure” or submissions based on the said allegations. it would be risky and unjustified, if not imprudent, to either accept or reject either party's submissions at this stage. 8. It, however, transpires from the aforesaid facts that the allegations made by the petitioner on the premise that the transfer orders have been issued in aid of the intention to close the Vatva unit and to effect the closure are, at this stage, in the “apprehension zone” without any legally sustainable foundation and actually there is no conclusive evidence on record which would establish that the company has effected closure and which would compel the Court to believe such position. 9. The situation on hand reminds this Court of SCA/9320/2008 18/43 JUDGMENT what has been observed and held in the judgment in the case of Taragauri Kalyanji Khimani vs. District Panchayat, Jamnagar, reported in 1984 GLH Page 984. “Any subordinate civil court merely because a suit is filed alleging that there is mala fides in the transfer would not be justified in passing an interim order staying the transfer even if there is a plea of mala fides remembering that mala fides succeed very rarely and it is not easy to make out successfully the case of mala fides. Courts should well be aware that it is not to take any and every statement of mala fides as deserving of notice for grant of interim relief. The practice of staying such transfers by subordinate civil courts, we notice, from figures supplied to us, has become so rampant that it is time that we consider whether this does not amount to an abuse. The best illustration of the use of the civil court for purposes of putting off implementation of transfer is furnished by the case before us and we are well aware that there may be many other similar cases.” SCA/9320/2008 19/43 JUDGMENT It has been time and again held that it is easier to allege malafides than to prove it. Any presumption and/or allegations about malafides cannot replace, and cannot be allowed to replace, evidence. On perusal of the impugned order, it transpires that the learned tribunal has neither rejected or dismissed nor discarded or brushed aside any of the contentions of the petitioner. Actually the learned tribunal appears to have considered it inappropriate, in absence of any evidence by either side, to deal with the same until proper and sufficient evidence is brought on record and, as it appears from the reading of the order, has therefore rightly – rather wisely – differed the same until evidence is brought in. The facts on the basis of which the allegation of malafides is made are yet to be established before the learned tribunal. Hence, at this stage, it is not possible to hold that the petitioner has established the allegation of malafides and consequently the impugned order cannot be faulted at this stage. 10. This brings in the second and the last ground based on contention of lack of authority SCA/9320/2008 20/43 JUDGMENT which comprises two submissions viz. (i) when the concerned persons were appointed, their conditions of service did not include condition about transfer, and (ii) that they cannot be transferred to such a unit which was not in existence at the time of their employment. 10.1. So far as the first limb of the submission is concerned, it is necessary to note that the petitioner Union has not produced appointment letters of the concerned persons to demonstrate that the service conditions did not include transferability as one of the conditions. 10.2. The respondent Company has, without expressly disputing the said allegation, cited and relied on, so as to fortify its claim that transferability is an existing service condition of the concerned person, the promotion orders of the concerned persons and claimed that the said orders contain clause regarding transfer which is in very wide terms and in view of such specific provision the company is empowered and authorised to transfer SCA/9320/2008 21/43 JUDGMENT the concerned persons. The said Clause reads thus; “TRANSFER/SECONDMENT: You will be obliged to work for any associated or subsidiary company on secondment or transfer, either full time or part- time and to work for the company or for any associated or subsidiary company in any part of India as directed by the Management.” Since the appointment letters are not produced, it is not possible to examine the claim of the petitioner that at the time of appointment there was no condition regarding transfer. The said aspect, however, may be presumed to be true in view of absence of any denial by respondent and when this position is presumed, then it becomes necessary to trace the source of authority or power to transfer the employees and that too at some distant place in another State. Thus comes in picture the respondent's submission about the promotion orders. Accordingly, the source of power to transfer is to be found in the promotion order. SCA/9320/2008 22/43 JUDGMENT 10.3. On perusal of the said promotion orders, it is noticed that they are of different dates inasmuch as some of them are of 1988, some are of 1993 and some are of 1995, however one common feature amongst all of them is that they are of period much prior to the date of the subject transfer orders and also much before the order of reference and have been in force since more than 12 to 15 years and that the clause/condition regarding transfer is framed in sufficiently wide terms so as to take in its fold the subject transfers, provided the respondent-company is, after placing appropriate evidence on record, able to establish its binding nature and effect. 10.4. The respondent claims that when the concerned persons were granted promotion the same were granted with condition regarding transfer and the concerned persons accepted both i.e., promotion and the condition of transfer. 10.5. Thus, what the respondent wants to claim is that from the time the concerned persons accepted promotion coupled with the provision regarding SCA/9320/2008 23/43 JUDGMENT transfer the said provision became their service condition and the said condition has been in existence since about 12 years. It is pertinent to note that even if it is presumed that at the time of their entry in the respondent company there was no provision regarding transfer, it does not appear to be in dispute (a) that the condition regarding transfer is incorporated in the promotion orders and thereby the condition regarding transferability has been in operation since about 12 years and that (b) during the past about 12 years the said condition or the action of introducing of said condition does not appear to have been challenged or even disputed either by the concerned persons or by the Union. 10.6. Further, it is a well-settled legal position that a person cannot reprobate and approbate simultaneously. Thus, it would not be open for the concerned 16 persons, more particularly, after passage of several years since the introduction of the said condition, to now make any grievance regarding the condition of transfer in their promotion orders and that too after having accepted SCA/9320/2008 24/43 JUDGMENT the promotion and after having enjoyed the fruits of promotion. 10.7. Besides this, normally it would not be permissible or open, in