SCA/9258/2008 1/38 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 9258 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 ? ========================================================= AVERY INDIA LIMITED - Petitioner(s) Versus PARESH GULABBHAI MEGHNATHI & 1 - Respondent(s) ========================================================= Appearance : MR KM PATEL for Petitioner(s) : MR. DG SHUKLA with Mr. TR Narayanan for Respondent(s) : 1 - 2. ========================================================= CORAM : HONOURABLE MR.JUSTICE K.M.THAKER Date : 17-18/07/2008 ORAL JUDGMENT 1. The petitioner in this petition is a Public Limited Company and respondents are two of its employees. By this petition, the petitioner has challenged an order dated 16.6.2008 passed below Exh.2 in Application No. 4 of 2008 in Reference SCA/9258/2008 2/38 JUDGMENT (LCAD) No. 8 of 2008 whereby the Labour Court, Ahmedabad has allowed the application Exh. 2 and the transfer orders passed by the petitioner company qua the two respondents of present petition have been stayed till the further orders or till disposal of the application. 2. The facts giving rise to this petition are that the respondents are, as claimed by them, in the employment of the petitioner company since more than 10 years. The orders passed by the petitioner company transferring the two respondents from Ahmedabad to Jaipur are in the root of the controversy and dispute between the parties. At the time when the said transfer orders came to be passed in April 2008 certain demands raised by the Union were pending before the Labour court in form of a dispute referred by an order of Reference dated 18th January 2008. Upon service of the said transfer orders on 14.4.2008 the respondents approached the Labour Court by preferring an application being Complaint No. 4 of 2008 in the said Reference (LCAD) No. 8 of 2008. An ex parte order was passed by the Labour Court staying the operation of the subject transfer orders. Thereafter, the petitioner company SCA/9258/2008 3/38 JUDGMENT filed its reply and opposed the complaint- application. After hearing the parties and upon taking into consideration the material available on record, the Labour Court passed the impugned order dated 16.6.2008. Aggrieved by the said order, the petitioner company has preferred the present petition. 3. Mr. Patel appears for the petitioner company and Mr. D.G. Shukla appears for the respondents. I have heard Mr. Patel and Mr. Shukla extensively. 4. Mr. Patel, for the petitioner, submitted that the impugned order and directions are without jurisdiction as well as against settled legal position and the relevant provisions. He also submitted that the impugned order and the ultimate directions are contrary to the finding recorded by the Labour Court that there is a condition regarding the transfer in the appointment letter and that the provision under Section 33(1)(a) is not applicable to the facts of the case. He also submitted that the subject transfer orders are in consonance with the terms and conditions of the respondents' appointment letters which contain condition regarding SCA/9258/2008 4/38 JUDGMENT transferability since their appointments and also prior to the order of reference and that therefore it cannot be said or even presumed that the petitioner company has effected any alteration in their service conditions and thus the complaint itself is not maintainable and consequently such restrain order could not have been passed. In support of his submissions that the findings regarding alleged malafides are unwarranted he relied upon the judgment of this Court in the case between Taragauri Kalyanji Khimani Vs. District Panchayat, Jamnagar & Another, reported in 1984 (4) GLH 589, and the judgement of Hon'ble Bombay High Court in the case between Wimco Ltd and Wimco Employees Union, reported in 2002(1) LLJ 888. 5. On the other hand, Mr. Shukla, Advocate for the respondents vehemently defended the impugned order and submitted that the Labour Court, in the facts of the present case, is justified in staying the transfer orders. He submitted that the transfer orders are passed by an officer who lacked authority to pass such orders and thus they are non est. He further submitted that the action of the petitioner SCA/9258/2008 5/38 JUDGMENT company is actuated by malafides inasmuch as the respondents are office bearers of the Union and the petitioner Company was averse to their presence and hence to harass the respondents the subject transfer orders came to be passed. Except assailing the transfer orders on the said 2 grounds, no other contention against the transfer orders has been raised by Mr. Shukla. He, of course, for supporting the allegations about malafide referred to the chronology of events starting from the date on which certain demands were raised against the petitioner company in respect of which the respondents had played lead role. In support of his submissions, Mr. Shukla relied on the judgments reported in 1994 (2) SCC 416; 2002 (4) LLJ 612; and 2006(2) LLJ 151. 6. At this stage, it is appropriate to mention that in support the submission that transfer has been an existing service condition, Mr. Patel relied upon the settlement dated 20th September 2006. Mr. Shukla opposed Mr. Patel's attempt of making reference of the settlement on the ground that the said settlement was not produced before the Labour Court at the time of hearing of Exh. 2 application and that the said settlement is now terminated. So as to SCA/9258/2008 6/38 JUDGMENT counter the said objection, Mr. Patel submitted that apart from the said settlement, the terms of the appointment letter itself are more than enough to establish that the transfer is and always has been service condition of the respondents, and that even after termination of settlement the terms remain binding until new settlement is arrived at. 7. So as to appreciate and deal with the first contention of Mr. Patel against the impugned order which rests on the ground of want of jurisdiction, it is necessary to take a close look at Section 33A and since the said provision is closely related to Section 33, it is appropriate to keep the said provision in focus as well. The said provisions read thus:- 33. Conditions of service, etc., to remain unchanged under certain circumstances during pendency of proceedings.__ (1) During the pendency of any conciliation proceeding before a conciliation officer or a Board or of any proceeding before an arbitrator or a Labour Court or Tribunal or National Tribunal in respect of an industrial dispute, no employer shall,__ (a) in regard to any matter connected with the dispute, alter, to the prejudice of the workmen concerned in such dispute, the conditions of service applicable to SCA/9258/2008 7/38 JUDGMENT them immediately before the commencement of such proceeding; or (b) for any misconduct connected with the dispute, discharge or punish, whether by dismissal or otherwise, any workmen concerned in such dispute, save with the express permission in writing of the authority before which the proceeding is pending. (2) During the pendency of any such proceeding in respect of an industrial dispute, the employer may, in accordance with the standing orders applicable to a workman concerned in such dispute [or, where there are no such standing orders, in accordance with the terms of the contract, whether express or implied, between him and the workman],__ (a) alter, in regard to any matter not connected with the dispute, the conditions of service applicable to that workman immediately before the commencement of such proceeding; or (b) for any misconduct nor connected with the dispute, discharge or punish, whether by dismissal or otherwise, that workman: (3) Notwithstanding anything contained in sub-section (2), no employer shall during the pendency of any such proceeding in respect of an industrial dispute, take any action against any protected workman concerned in such dispute__ (a) by altering, to the prejudice of such protected workman, the conditions of service applicable to him immediately before the commencement of such proceeding; or (b) by discharging or punishing whether by dismissal or otherwise, such protected workman, SCA/9258/2008 8/38 JUDGMENT save with the express permission in writing of the authority before which the proceeding is pending. (4) In every establishment, the number of workmen to be recognised as protected workmen for the purposes of sub-section (3) shall be one per cent of the total number of workmen employed therein subject to a minimum number of five protected workmen and a maximum number of one hundred protected workmen and for the aforesaid purpose, the appropriate Government may make rules providing for the distribution of such protected workmen among various trade unions, if any, connected with the establishment and the manner in which the workmen may be chosen and recognised as protected workmen. (5) Where an employer makes an application to a conciliation officer, Board, [an arbitrator, a] Labour Court, Tribunal or National Tribunal under the proviso to sub-section (2) for approval of the action taken by him, the authority concerned shall, without delay, hear such application and pass, [within a period of three months from the date of receipt such application], such order in relation thereto as it deems fit;] 33.A.Special provision for adjudication as to whether conditions of service, etc., changed during pendency of proceedings.__ Where an employer contravenes the provisions of Section 33 during the pendency of proceedings [before a conciliation officer, Board, an arbitrator, a Labour Court, Tribunal or National Tribunal], any employee aggrieved by such contravention, may make a complaint in writing, [in the prescribed manner,__ (a) to such conciliation officer or Board, and the conciliation officer or Board shall take such complaint into account SCA/9258/2008 9/38 JUDGMENT in mediating in, and promoting the settlement of, such industrial dispute, and (b) to such arbitrator, Labour Court, Tribunal or National Tribunal and on receipt of such complaint, the arbitrator, Labour Court, tribunal or National Tribunal, as the case may be, shall adjudicate upon the complaint as if it were a dispute referred to or pending before it, in accordance with the provisions of this Act and shall submit his or its award to the appropriate Government and the provisions of this Act shall apply accordingly.] 7.1. It clearly flows from the reading of Section 33-A that breach or contravention of Section 33 by employer is the condition precedent for exercising jurisdiction under Section 33-A and/or for invoking the remedy available under Sec.33-A. 7.2. Unless it is shown by an applicant that (a) his employer has contravened Section 33; (b) such contravention is caused during pendency of dispute; and (c) he is a concerned workman in the dispute during pendency of which Section 33 is violated, the occasion for exercising jurisdiction under Section 33A does not arise. Hence, before exercising jurisdiction under Section 33-A, it is necessary for the Court or Tribunal to satisfy itself that employer SCA/9258/2008 10/38 JUDGMENT has contravened Section 33 and that the applicant has, prima facie, demonstrated breach of S. 33. 8. Thus, in present case it is necessary to first decide whether petitioner-employer has contravened Section 33 and whether the learned court has recorded any finding about breach of Section 33 by petitioner employer. To examine the challenge posed by the petitioner against the impugned order, it is also necessary to find out whether the finding is legally tenable or not. 8.1. Section 33 (1) and 33(2) are in two parts. One part deals with the dispute which is connected with the pending dispute and the other part deals with the dispute which is not connected with the pending dispute. There is further sub-division which deals with disputes arising on account of dismissal/discharge etc., on one hand and on the other hand the disputes arising on account of alteration in service conditions. Section 33(1)(a) and 33(2)(a) relate to disputes about alteration in service condition and 33(1)(b) & 33(2)(b) relate to disputes about dismissal/discharge etc. SCA/9258/2008 11/38 JUDGMENT 8.2. The learned Court has, after considering the subject matter of Ref. (LCAD) No. 8/2008, rightly held that present dispute is not connected with the subject matter of the pending Ref. No.8/2008. Further, the learned court has also, rightly, recorded that “there is no matter of transfer to be adjudicated. Therefore, the provision of the Section 33(1)(a) is not applicable to the facts of present case”. 8.3. Since this is not a case of dismissal or discharge question of applicability of S.33(1)(b) or 33(2)(b) does not arise. It is also not the case of the respondent that they were “protected workmen”, hence Section 33(3) also would not come in picture. This leaves behind Section 33(2)(a). 9. So far as S. 33(2)(a) is concerned it would come in operation if, and only if any alteration in any service condition as existing prior to commencement of pending dispute is made without seeking approval of the Court or Tribunal. Hence, it was necessary for the learned court to first find out whether the petitioner-employer, in issuing subject transfer order, had altered any service condition existing before the commencement of said Reference SCA/9258/2008 12/38 JUDGMENT proceedings. 10. It is not in dispute that in case of both respondents transfer has been one of the terms/conditions of service made applicable since their appointment by virtue of specific provision in the appointment letters. This is evident from Clause 7 of the appointment letters. The said Clause reads thus: (7) TRANSFER You may be transferred at any time from one job or section or department to another and from one Establishment to any other Establishment of the Company in any State within the Indian Union which exists at present or may come into existence in future, provided, however,that such transfer does not involve any loss in normal wages. 11. Apart from this, transfer is an accepted and settled position in the petitioner company by way of negotiated settlement also. The settlement, however, aims at restricting the area/zone within which the employees can be transferred. The said Clause 21 of the settlement, reads thus:- 21. REDEPLOYMENT/TRANSFER – ARISING OUT OF BUSINESS NEED: For smooth and efficient functioning of the service network, it becomes necessary to transfer/redeploy/relocate the workmen from SCA/9258/2008 13/38 JUDGMENT one place of work to another place of work. This issue has been discussed in detail with the federation. In order to minimize the hardships faced by the workmen due to such transfers, it has been agreed that the workmen in Area establishments will be transferred/redeployed/relocated in the same area or the adjoining area as detailed in annexure II.......” 12. From the aforesaid discussion, it follows that transfer has been the condition of service of respondents since the initial stage of their employment. This aspect of the matter is not denied by the respondents. 13. When an employer passes transfer order in exercise of powers flowing from such provision, then it would not constitute alteration of condition of service existing before commencement of the proceedings of the Reference/dispute. 14. In such cases the transfer order is only manifestation of, or implementation of, existing service condition and that therefore it would not constitute contravention of Section 33. 15. Hence, it does not appear that in present case the petitioner-employer has contravened Section SCA/9258/2008 14/38 JUDGMENT 33 of the Act by issuing transfer orders. 15.1. The learned court has, however, in para 26 of the impugned order held thus:- 26. ....In the present case the opponent has not produced any copy of the standing orders applicable to the complainants. It is also not the case of the opponent that there is no standing orders applicable to the complainants. Therefore, the provisions of the section 33(2) of the Industrial Dispute Act, 1947 are clearly attracted to the facts of the present case, according to me. Therefore, it can be believed, prima facie, at this stage, that the opponent has violated the provisions of the I.D.Act and transferred the complainants in violation of the standing orders. Therefore, the transfers being in violation of the standing orders, itself can be termed as illegal or malafide, at this stage. Therefore, I cannot agree with learned advocate Mr. B.K. Oza appearing for the opponent that the opponent has not changed the conditions of the service of the complainants.” 15.2. The learned Court, while recording such conclusions, ignored or lost sight of the specific provision about transfer in the appointment letter as well as the Clause 21 of the settlement. Further, it SCA/9258/2008 15/38 JUDGMENT is not even the case of the respondents that in the Standing Orders there is a provision which prohibits transfer. 15.3. On this count i.e. regarding the aforesaid findings with reference to the Standing Orders there are serious infirmities in the impugned order. Firstly, the learned court has not addressed the issue as to whether the provisions of Standing Orders are applicable to the respondents' place of employment i.e., petitioner's office at Ahmedabad or not. It is relevant to note that the Standing Orders apply to “industrial establishments” and it is petitioner's case that its office, being a commercial establishment, would not fall within the purview of said term. This issue should have been decided first before holding the transfer orders contrary to Standing Orders. Secondly even if the applicability of Standing Orders is presumed then also without looking at the Standing Orders and the provisions it could not have been presumed that the transfer orders are in violation of Standing Orders. It is recorded by the learned Court that Standing Orders are not produced on record, which means that the Court has not even perused, much less examined, the Standing SCA/9258/2008 16/38 JUDGMENT Orders. Thus, without examining the Standing Orders and the provisions, such a finding-conclusions could not have been reached. Thirdly the learned Court has not recorded any finding that the applicable Standing Orders contains a provision which prohibits transfer. In absence of such finding, it could not have been declared that the transfer orders are in violation of Standing Orders. Further, what the learned Court was required to consider and decide was whether there was any alteration in service conditions which were applicable immediately before the commencement of proceedings of pending dispute (in present case Ref. 8/2008). It is already seen, and even the learned Court has recorded, that the appointment letters include condition of transfer. So, prima facie, this is not a case of alteration of service condition existing prior to commencement of Reference proceedings. The most important part of the infirmities, besides those mentioned above, in the impugned order – in the context of the findings on the ground of Standing Orders – is that the learned court appears to have lost sight of the relevant part of the provision under Section 33(2) which reads:- “....or, where there are no such standing orders, in accordance with the terms of the contract....” The SCA/9258/2008 17/38 JUDGMENT said provision, thus, contemplates, and provides for, a situation where there are no Standing Orders, and it is provided that in such cases the terms of contract i.e., appointment letters would apply. Thus, when the respondents could not bring to the notice of the learned Court any Standing Orders – either settled Standing Orders or model Standing Orders – and also could not satisfy the learned Court on the issue of applicability of Standing Orders and could not show any provision under applicable Standing Orders prohibiting – in express terms – transfer, then it was too risky, premature and erroneous to hold, at this stage, that the transfer orders are in violation of Standing Orders. The impugned finding by the learned court is, for the aforesaid reasons, not acceptable, justified and tenable. Thus, it is not possible, at this stage, to hold that contravention of Section 33 has occurred at the hands of the petitioner. 16. In this regard, it would not be out of place to refer the judgment in the case between Management of Cipla Ltd. And Jayakumar R. & Another, (1999) 1 SCC 300 wherein the Hon'ble Supreme Court has SCA/9258/2008 18/38 JUDGMENT observed as follows; “12. In our opinion, the aforesaid construction does not flow from the provisions of the Standing Orders when read along with the letter of appointment and, therefore, the conclusion arrived at by the High Court was not correct. As has already been noticed the letter of appointment contains both the terms namely for the respondent being transferable from Bangalore as well as with regard to the applicability of the Standing Orders. These clauses, namely, clauses 3 and 11, have to be read along with the Standing Orders, the relevant portion of which has been quoted hereinabove. Reading the three together we do not find that there is any conflict as has been sought to be canvassed by the learned counsel for the respondent. Whereas the Standing Orders provide for the department wherein a workman may be asked to work within the establishment itself at Bangalore, clause 3 of the letter of appointment, on the other hand, gives the right to the appellant to transfer a workman from the establishment at Bangalore to any other establishment of the Company in SCA/9258/2008 19/38 JUDGMENT India. Therefore, as long as the respondent was serving at Bangalore he could be transferred from one department to another only in accordance with the provisions of the Standing Orders but the Standing Orders do not in any way refer to or prohibit the transfer of a workman from one establishment of the appellant to another. There is thus no conflict between the said clauses.” 17. When the respondents could not demonstrate or establish contravention of Section 33, which is sine qua non for exercising jurisdiction u/s. 33-A, the learned Court erred in proceeding further to examine and that too before recording evidence - the transfer orders, the competence of the officer who issued the orders and the intention behind the orders. 18. This discussion, now takes the Court to deal with the submissions of Mr. Shukla, for the respondents. He has, while supporting the impugned order, assailed the transfer orders on ground of lack of authority with the officer who issued the said SCA/9258/2008 20/38 JUDGMENT orders and secondly on the ground of malafides. During the hearing of the petitioner also Mr. Shukla attacked the orders on these two grounds only and restricted his submissions to the said two grounds. The discussion regarding the aspect of Standing Orders is undertaken, at some length, in this order because the learned court has faulted the transfer orders on said ground. 18.1. While elaborating his submissions regarding authority of the officers who issued the orders, Mr. Shukla submitted that Mr. Arvind Modgil, who was Area Service Manager, has signed and issued the orders whereas the competent officer to pass order in respect of the respondents, would be the Area Manager and that therefore Mr. Modgil was not competent to sign and issue the said transfer orders. 18.2 So far as the said contention is concerned, the learned Court has recorded findings in Para 27 of the impugned order. The learned Court has taken note of present petitioner's submission that the instructions for issuing order of transfer were received from Head Office and the said Mr. Arvind Modgil, Area Service Manager had merely issued the SCA/9258/2008 21/38 JUDGMENT orders by signing the same, and that it was not his decision. After noting the said submission of present petitioner, the learned court has observed and recorded thus; “.....No document has been produced in the present case by the opponent to show that the opponent ever empowered the person who has signed the transfer orders to do so on 8.4.08 or the transfer orders came from the Head office. Therefore, in absence of such document it can be said, at this stage, that the transfer orders have