IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 13-3-2008 CORAM THE HON'BLE MR.JUSTICE N.PAUL VASANTHAKUMAR W.P.No.36790 of 2007 M.P.No.1 of 2007 & 1 of 2008 The Management of Orchid Chemicals and Pharmaceuticals Ltd., rep.by its Managing Director, Alathur, Kancheepuram. ... Petitioner Vs. 1. State of Tamil Nadu, rep.by Secretary to Government, Labour and Employment Department, Fort St.George, Chennai - 600 009. 2. Orchid Chemicals and Pharmaceuticals Employees Union, Rep.by its General Secretary, No.32, Padavattamman Koil Street, 104, Kanagapattu Village, Thirupporur Post, Kancheepuram District - 603 110... Respondents Prayer: This writ petition is filed under Article 226 of Constitution of India, praying this Court to issue a writ of Certiorari calling for the records on the file of the first respondent pertaining to his order bearing G.O.(D)No.839 L&E (A2) Department, dated 5.12.2007 passed by the first respondent and quash the same. For Petitioner : Mr.N.Vijaynarayan, Senior Counsel for Mr.R.Parthiban For 1st Respondent : Mr.S.Gopinathan, Addl.Government Pleader https://hcservices.ecourts.gov.in/hcservices/ For 2nd Respondent : Mr.N.G.R.Prasad, for M/s.Row & Reddy O R D E R By consent of both parties, the writ petition itself is taken up for final disposal. 2. Prayer in the writ petition is to quash the Government order issued in G.O.(D)No.839 Labour and Employment Department dated 5.12.2007 passed under Section 10-B of the Industrial Disputes Act, 1947. 3. The brief facts necessary for disposal of the writ petition are as follows: (a) Petitioner is a duly registered Company under the Companies Act, 1956, manufacturing life saving antibiotics and pharmaceutical products. It is a 100% export oriented company, earning huge foreign exchange for the Government of India and for the State of Tamil Nadu. Petitioner Company is having the in-house mechanism for redressal of grievances of the workers for settlement of disputes. (b) The second respondent Union is a Trade Union, defined under the Trade Union Act, 1926. Petitioner Company has a manufacturing Unit at Alathur near Chennai, wherein about 1200 employees are employed. According to the petitioner, in view of the harmony which prevailed in the establishment, the workers did not feel the necessity to have a Trade Union. However, some of the workers Forum and the Trade Union started creating problems to the petitioner Company. (c) As the petitioner Company is manufacturing life saving drugs and pharmaceuticals and is earning huge foreign exchange for the Central Government as well as to the State Government, it is a public utility company, wherein strikes are prohibited in terms of the provisions of the Industrial Disputes Act, 1947. In December, 2006, some of the employees resorted to illegal strikes without giving any prior notice and some employees resorted to acts of violence destroying the properties of the company and said to have used abusive remarks against loyal officers resulting in criminal complaint and action by the Police officials. Some of the employees resorted to picketing and prevented the loyal workers, apart from affecting free ingress and egress of men and material. (d) On 5.4.2007, few other employees stopped work and created industrial unrest including switching of the refrigeration system. Pursuant to the said agitation, huge loss of around Rs.4 crores was sustained due to the disruption of production. On 5.4.2007, 45 https://hcservices.ecourts.gov.in/hcservices/ employees were suspended. Since the violence was unabated, the management filed civil suit and got injunction against the employees from preventing the loyal workers, who were reporting for duty and from obstructing the entry and exit of vehicles. At the instance of the Union the injunction was vacated, however injunction was restored by this Court in C.R.P.Nos.1036 to 1038 of 2007. The attempt made by the Employees Union to file SLP before the Supreme Court against the injunction granted by this Court also ended in vain. (e) Petitioner management was repeatedly requesting the employees to report back for work without prejudice to the right to take appropriate action in accordance with law. The said request having not been considered by the workers at the instigation of the Union, the management took firm decision to maintain discipline at any cost. According to the petitioner, some of the workers reported for duty. (f) On 26.7.2007, some employees came to the factory and the officials of the Company informed that they would be permitted to report for duty subject to giving letter of good conduct in future and to undergo disciplinary proceeding. Only six employees reported for duty initially and at a later stage, 37 workers reported for duty. The other workers refused to give such letter assuring good conduct in future. Therefore the management initiated disciplinary proceedings against the striking employees, conducted enquiry and imposed punishment of dismissal from service and filed approval petitions under section 33(2)(b) before the appropriate authority. (g) The disputes raised by the Union was taken up for conciliation by the Conciliation Officer. Even though initially the petitioner Company declined to take part in the proceeding, subsequently it participated in the proceeding and put forward their stand before the Conciliation Officer. The conciliation officers advised the petitioner Company to condone the participation in illegal strike and take the workers back in service. Petitioner management having not accepted the request, the Conciliation proceeding did not materialise and a failure report was submitted and the first respondent referred the dispute along with connected disputes for adjudication before the Industrial Tribunal, Chennai, by order dated 5.12.2007 and simultaneously passed the impugned order under section 10-B of the Industrial Disputes Act, 1947, by directing the petitioner management to provide work. (h) The said order is challenged on the ground that several employees, who were dismissed from service for their proven misconduct of participation in illegal strike and indulged in acts of violence in a public utility service had been ordered to be taken back in service even though their non-employment was not the subject matter referred for adjudication to the Tribunal. The power under section 10-B can be invoked to keep the public utility service open https://hcservices.ecourts.gov.in/hcservices/ and in a running condition, which will not in any way empower or enable the Government to reinstate the suspended/dismissed employees by way of an interim relief. The stipulation to the maintenance of conditions of service as an interim measure can only relate to industrial disputes and the issue of non-employment being not a dispute, no order for their reinstatement can be passed. The maintenance of status-quo should be three months prior to the date of reference and not the status-quo prevailed as on 26.7.2007. The workmen having not given the letter of good behaviour for their future conduct and having been dismissed, cannot be allowed to be restored to their duty, notwithstanding their dismissal from service and the implementation of the impugned order not only is prejudicial to the establishment of the petitioner but also is prejudicial to public interest. 4. The second respondent Union filed counter affidavit stating that the writ petition filed challenging the order under section 10- B, which is passed under the executive power of the Government on subjective satisfaction is not maintainable. On merits of the case it is stated that on 18.12.2006 the workmen registered the second respondent Trade Union and informed the same to the petitioner management. Immediately thereafter petitioner management transferred four important office bearers of the Trade Union to far off places. The President of the Union was transferred to Aurangabad; General Secretary was transferred to Hyderabad; Joint Secretary was transferred to Valliyur - Nagercoil; and the Treasurer was transferred to Uttaranchal, and the said transfer orders were passed only to victimise the office bearers of the Trade Union. On 20.12.2006 i.e., after the date of transfer orders, the Union approached the Deputy Commissioner of Labour, Chennai, who issued conciliation notice to the management asking them to appear before him on 26.12.2006. On 21.12.2006, petitioner management suspended 14 workers and dismissed two workers without enquiry. On 22.12.2006, the management issued charge memo to 14 suspended workers. On 27.12.2006 the management dismissed two more workers viz., the President and General Secretary of the Union without enquiry. The management did not participate in the conciliation proceeding on 26.12.2006, instead filed O.S.No.360 of 2006 and got an order of injunction restraining the workers from demonstrating within 100 meters and also not to obstruct the ingress and egress of vehicles and also not to prevent the loyal workmen from attending to the work. Hence the strike notice was issued by the Union on 2.1.2007 proposing to go on strike on or after 15 days. However, on the advise of the Deputy Commissioner of Labour, the strike was not resorted to. The injunction order was vacated on 13.3.2007, against which the petitioner management filed CRP.Nos.1036 to 1038 of 2007 before this Court, which was allowed on 21.4.2007 and in SLP(C)No.9041 of 2007, notice was ordered. It is further stated in the counter affidavit that the impugned order merely directs the petitioner management to provide work to those who called off the strike on 26.7.2007 and https://hcservices.ecourts.gov.in/hcservices/ exemption is granted to the petitioner management not to take back the workers against whom criminal complaints were filed with police. On 26.7.2007, even after the workers called off the strike, the management did not allow the workers to take up the work. Most of the employees were very much on duty on 26.7.2007 and they were not allowed to join duty since they refused to give undertaking. After 26.7.2007, 147 workers were dismissed from service and prior to 26.7.2007 only two workers were dismissed and other two workers were terminated subsequently. As on 3.1.2008, 127 workers were kept under suspension and 30 workers were given charge memos, out of which, 11 workers are not in service. It is further stated in the counter affidavit that the petitioner Company is treated as a public utility service, earning foreign exchange to the country, the Government was right in directing the management to provide work to those who had called off the strike on 26.7.2007, pending adjudication of the reference already made. 5. First respondent filed counter affidavit stating that since the petitioner management failed to adhere to the conciliation suggestions, the failure report was submitted and the workers numbering about 265, even though reported for duty on 26.7.2007 after calling off the strike, petitioner company refused to take them back and therefore a failure report was submitted, pursuant to which a reference was made under section 10(1) of the Industrial Disputes Act, 1947, through G.O(D)No.835 dated 5.12.2007 referring seven demands to the Industrial Tribunal for adjudication and thereafter G.O(D)No.839, dated 5.12.2007 was issued under section 10-B giving direction and the Government is empowered to pass orders under section 10-B for maintaining industrial peace in the establishment. The said order will cease to operate on the expiry of six months and it is only an interim measure. The impugned order is to provide work to all the workers who called off the strike on 26.7.2007, except to those workmen against whom criminal complaints were filed with the police and it is only a tentative truce in an emergency situation and the disputed issues are to be decided ultimately by the adjudicatory forum. It is further stated in the counter affidavit that the impugned order was passed for maintaining employment and industrial peace and to prevent continuing industrial unrest in the establishment, which is a public utility service. 6. A reply affidavit was filed by the petitioner stating that the petitioner company had informed the workmen on 26.7.2007 that they would be permitted to work on condition that they give a letter of good conduct in future and the workmen numbering 37 reported back to work on giving such letter and rest of the workers having failed to give such letter, disciplinary actions were initiated and suspension/dismissal orders have been passed. It is further stated that disciplinary action was initiated against the striking workmen, pursuant to their violent action of causing damage to the property and danger to life, apart from causing loss of production and https://hcservices.ecourts.gov.in/hcservices/ disturbance to peaceful atmosphere in the work spot and therefore the impugned order ordering reinstatement of the said workmen is opposed to public interest. 7. The learned Senior Counsel appearing for the petitioner submitted that Section 10-B order is not warranted in this case as a reference was made before the Industrial Tribunal for adjudication on seven issues and prior to the reference, several employees were either suspended or dismissed from service and as against the dismissal, no reference was made and by virtue of the impugned order, first respondent is forcing the petitioner management even to restore the dismissed employees. The learned Senior Counsel also submitted that the subjective satisfaction arrived at by the Government is not with reference to full facts and the dismissal orders could have been brought to the notice of the Government if an opportunity was given to the petitioner. According to the learned Senior Counsel the impugned order is contrary to section 10-B(1) proviso and 10-B(3) by contending that status-quo prior to three months from the date of issue of the order can be ordered by the Government and by ordering reinstatement or restoring the dismissed employees, the same cannot be compensated to the petitioner management, which is provided under Section 10-B(3) of the Act. 8. The learned counsel appearing for the second respondent submitted that the management started victimising the office bearers of the Trade Union, the moment the union was registered and demand was made. The office bearers were transferred to far of places, which shows victimisation attitude and ante-labour policies of the petitioner management. The learned counsel further submitted that on 26.7.2007 all the employees reported for duty and the petitioner management permitted the workmen to work, who gave letter of undertaking and not allowed those employees to work, who have not given such undertaking. Therefore, the denial of employment to workmen from 26.7.2007 is not justified. As the impugned order is passed under section 10-B on subjective satisfaction of the Government, the same cannot be questioned in a writ petition. The power given to the Government under section 10-B is an emergency power vested with the Government to maintain industrial peace in a public utility company and the order passed will remain in force only for six months and thereafter the parties will abide by the decision of the Industrial Tribunal. 9. The learned Additional Government Pleader appearing for the first respondent reiterated the contentions raised in the counter affidavit filed in the writ petition and stated that the power having been exercised by the Government on subjective satisfaction taking note of the entire background of the issue, the same cannot be interfered with under Article 226 of Constitution of India. https://hcservices.ecourts.gov.in/hcservices/ 10. I have considered the rival submissions made by the learned Senior Counsel for the petitioner as well as the learned Counsel for the respective respondents. 11. The point in issue is whether the impugned order passed under section 10-B of the Industrial Disputes Act, 1947, is justified on the background of the case or not. 12. Section 10-B of the Industrial Disputes Act, 1947, (Tamil Nadu Act 36 of 1982) reads as follows: "10-B. Power to issue order regarding terms and conditions of service pending settlement of dispute.- (1) Where an industrial dispute has been referred by the State Government to a Labour Court or a Tribunal under sub-section (1) of section 10 and if in the opinion of the State Government, it is necessary or expedient so to do for securing the public safety of convenience or the maintenance of public order or supplies and services essential to the life of the community or for maintaining employment or industrial peace in the establishment concerning which such reference has been made, it may, by general or special order, make provision,- (a) for requiring the employers or workmen or both to observe such terms and conditions of employment as may be specified in the order or as may be determined in accordance with the order, including payment of money by the employer to any person who is or has been a workman; (b) for requiring any public utility service not to close or remain closed and to work or continue to work on such terms and conditions as may be specified in the order; and (c) for any incidental or supplementary matter which appears to them to be necessary or expedient for the purpose of the order: Provided that no order made under this sub- section shall require any employer to observe terms and conditions of employment less favourable to the workmen than those which were applicable to them at any time within three months immediately preceding the date of the order. https://hcservices.ecourts.gov.in/hcservices/ Explanation.- For the purpose of this sub- section, "public utility service" means- (i) any section of an industrial establishment on the working of which the safety of the establishment or the workmen employed therein depends; (ii) any industry which supplies power, light or water to the public; (iii) any industry which has been declared by the State Government to be a public utility service for the purpose of this Act. (2) An order made under sub-section (1) shall cease to operate on the expiry of a period of six months from the date of the order or on the date of the award of the Labour Court or the Tribunal, as the case may be, whichever is earlier. (3) Any money paid by an employer to any person in pursuance of an order under sub-section (1) may be deducted by that employer from out of any monetary benefit to which such person becomes entitled under the provisions of any award passed by the Labour Court or the Tribunal, as the case may be."- Tamil Nadu Act 36 of 1982, S.2 (w.e.f.15.8.1982)." 13. Admittedly petitioner is a pharmaceuticals and life saving drug manufacturing company and the manufactured drugs and antibiotics are intended for export to earn foreign exchange to the Government of India as well as to the Government of Tamil Nadu. Since it is manufacturing drugs and antibiotics, admittedly it is a public utility Company/industry and the non-production or closure will definitely affect the public interest. Hence it is beyond doubt that the petitioner Company is a public Utility company. 14. From the pleadings of the parties it is seen that the whole dispute arose from 18.12.2006, the date on which the second respondent Union was registered as Trade Union and the Union informed the list of office bearers to the petitioner management. It is also an admitted fact that office bearers of the Union were transferred to Aurangabad, Hyderabad, Valliyur-Nagercoil and Uttaranchal. Due to the said transfer, unrest among the workers emenated. There was strike for some time and all the workmen reported for duty on 26.7.2007. It is also the definite case of the petitioner as well as the second respondent Union that workmen, who gave letter of https://hcservices.ecourts.gov.in/hcservices/ undertaking that they will behave properly in future, were permitted to rejoin duty on 26.7.2007 and such of those workmen who have not given the said letter of undertaking, were not permitted to join duty. Thereafter some of the workmen were suspended and some were dismissed. 15. Admittedly, the transfer of workmen, strike, not permitting the workmen to join duty after the strike was over on 26.7.2007, were all reported to the Deputy Commissioner of Labour for Conciliation. The management, even though participated in the conciliation proceedings, refused to accept the conciliatory efforts taken by the Conciliation Officer and thereafter admittedly failure report was submitted to the Government. The Government after receiving the failure report, referred seven issues for adjudication before the Industrial Tribunal through G.O.(D)No.835 Labour and Employment Department, dated 5.12.2007. The issues referred before the Labour Court for adjudication are as follows: 1) Whether the transfer of the office bearers of the Union is justified ? 2) Whether the dismissal of the workmen viz., Srinivasalu and G.Veerasamy amounts to victimisation or not ? 3) Whether the dismissal of P.Ramakoteeswara Rao and M.A.Kalaiselvan due to their activities in the Labour Union is justified or not ? 4) Whether the withholding of one day salary on 20.12.2006 for 149 workmen is justified or not ? 5) Whether the suspension of Balakonda Rayadu from 17.1.2007 is justified and whether the claim of the Union to restore him in service is justified ? 6) Whether not-permitting the workmen, who called of their strike in spite of their reporting to duty on 26.7.2007 is justified and whether they are entitled to be restored to duty ? 7) Whether denial of employment to the workers, when they reported for duty on 26.7.2007, who have resorted to strike from 5.4.2007 is justified and whether a direction is to be issued to permit the workers to resume their work and whether salary and other benefits are to be ordered for the period in which they were not allowed to work ? https://hcservices.ecourts.gov.in/hcservices/ From the above issues referred to the Industrial Tribunal, it is evident that not permitting the workers to report for duty from 26.7.2007 is also one of the specific issue referred for adjudication. 16. Admittedly as on 26.7.2007, only two workers were dismissed and the management was willing to permit all other workers who are willing to give undertaking for future good conduct. The learned senior counsel for the petitioner is not right in contending that by virtue of the impugned order passed under section 10-B the dismissed workers are ordered to be restored to service. Dismissal order to other workers having been passed subsequent to 26.7.2007, and the said workers also having been denied work from 26.7.2007 in spite of reporting for duty, which is also one of the subject matter of reference, the Government is well within its power to pass the order stating that the management shall provide work to all the workers who called of the strike and reported for duty on 26.7.2007, except those workmen against whom criminal complaints are filed with police by the management. 17. The power of the Government to pass interim orders to maintain industrial peace was considered by the Supreme Court in the decision reported in AIR 1961 SC 420 (State of U.P. v. Basti Sugar Mills). Section 3(b) of the Uttar Pradesh Industrial Disputes Act, 1947, which is akin to Section 10-B of the Tamil Nadu Act 36 of 1982 was considered in that case. In paragraph 9, the Supreme Court held thus, "9. We entirely agree with Mr.Pathak that the normal way of dealing with an industrial dispute under the Act would be to have it dealt with judicially either by conciliation or by adjudication and that judicial process cannot be circumvent by resort to executive action. The proceeding before a conciliator or an adjudicator is, in a sense, a judicial proceeding because therein both the parties to the dispute would have the opportunity of being heard and of placing the relevant material before the conciliator or adjudicator. But there may be an emergency and the Government may have to act promptly "for securing the public safety or convenience or the maintenance of public order or supplies and services essential to the life of the community or maintaining employment." It was, therefore, necessary to arm it with additional powers for dealing with such an emergency. Clause (b) of S.3 was apparently enacted for this purpose. An order made thereunder would be in the nature of a temporary or interim order as would be clear from the words "for such period as may be specified" https://hcservices.ecourts.gov.in/hcservices/ appearing therein and from the second proviso to S.3. Under this proviso where an industrial dispute is referred for adjudication under cl.(d) an order made under cl.(b) cannot be enforced after the decision of the adjudicating authority is announced by or with the consent of the State Government. It would, therefore, follow from this that where the Government has made an executive order, as it did in this case, under cl.(b) of S.3, it is open to the aggrieved party