1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.188 OF 2008 PRS Permacel Private Limited a company incorporated under the provisions of the Companies Act, 1956 and having its registered office at 63,Bombay Samachar Marg, Mumbai-400 001. ... Petitioner v/s. 1. Johnson & Johnson Employees Union (Permacel Division), a Trade Union registered under the provisions of the Trade Unions Act and having its office at Safed Pool, Andheri Kurla Road, Mumbai-400 072. 2. The Commissioner of Labour, Government of Maharashtra 3. Presiding Officer, Industrial Tribunal, Mumbai .. Respondents ALONGWITH WRIT PETITION NO.187 OF 2008 2 PRS Permacel Private Limited a company incorporated under the provisions of the Companies Act, 1956 and having its registered office at 63, Bombay Samachar Marg, Mumbai-400 001. ... Petitioner v/s. 1. Johnson & Johnson Employees Union (Permacel Division), a Trade Union registered under the provisions of the Trade Unions Act and having its office at Safed Pool, Andheri Kurla Road, Mumbai-400 072. 2. The Commissioner of Labour, Government of Maharashtra 3. Presiding Officer, Industrial Tribunal, Mumbai .. Respondents Mr. J.P. Cama, Senior Advocate with Mr. Ajit Kapadia and Mr. G.S. Shetty i/by M/s. Crawford Bayley & Co. for Petitioner. Mr. Arshad Shaikh with Mr. Mahesh Londe i/by M/s. S. Udeshi & Co. for the Respondents. CORAM : SWATANTER KUMAR, C.J. & J.P. DEVADHAR, J. Date of reserving the judgment : 11 th July, 2008 3 Date of pronouncing the judgment : 31 st July, 2008 JUDGMENT (Per Swatanter Kumar, C.J.) PRS Permacel Private Limited, a company incorporated under the provisions of the Companies Act, 1956 has approached this court under Article 226 of the Constitution of India praying that the court be pleased to issue appropriate writ, order or direction declaring the order of reference dated 22nd June, 2007 as illegal, invalid, arbitrary and violative of Article 14 of the Constitution of India and, thus, the same be set aside as not even being maintainable. Besides seeking striking down of the said order, it has also been prayed that the Presiding Officer, Industrial Tribunal, Mumbai be also directed not to proceed with the reference proceedings in furtherance to the order dated 22nd June, 2007. The challenge to the order dated 22nd June, 2007, interalia is on the following grounds: (a) There is no master and servant relationship between the petitioner and members of the respondent No.1. Thus, no reference could be made by respondent 4 No.2 and could not be proceeded with any further by respondent No.3. To buttress this submission, it is also contended that even the members of the union till today have not taken a clear stand as to whether they are the employees of the petitioner and/or the erstwhile company Johnson & Johnson which is stated to have been transferred to the petitioner. (b) The order of reference suffers from an error of jurisdiction in as much as the competent authority before making the reference should have examined the question of employer-employee relationship. Therefore, the order of reference is arbitrary and made without application of mind. 2. We may refer to the necessary facts giving rise to this writ petition. 3. The petitioner claims that in August, 1999, they acquired 5 Permacel Division of Johnson & Johnson Limited for a consideration in excess of Rs.29 crores. They entered into an agreement for acquisition of the undertaking wherein it was also agreed that petitioner would take over the services of the workmen who were employed in the said undertaking by the Johnson & Johnson. It is averred by the petitioner that despite dialouges and negotiations, a final settlement concerning the terms and conditions of the employment of the workmen could not be arrived at due to the unreasonable attitude of the workmen. This transfer of the undertaking itself was challenged by the Union which maintained that its members were workmen of Johnson & Johnson. This transfer was questioned on different grounds including a fraud on the workmen, who even filed a complaint before the Industrial Court terming the transaction as a sham one but the complaint was dismissed which order was challenged by the workmen in a writ petition filed before this court being Civil Writ Petition No.1312 of 2004 which came to be dismissed vide order dated 14th July, 2004. The workmen again preferred a review petition against the said order being Review 6 Petition No.56 of 2004 which was dismissed and even appeal preferred against that order was also dismissed. The matter was taken upto the Supreme Court in SLP being C.R. No.4790 of 2006 which was subsequently withdrawn. There was promise in carrying on the business of the petitioner company still its production was adversely affected because of the attitude of the workmen. Hence at the instigation of respondent No.1, the workmen did not give production as per the machine capacities and the agreed norms of production and they did not accept directions and instructions of the supervisors and managers and indulged in indiscipline of various nature, all on the grounds that the petitioners managers and supervisor had no authority over them. As many as 30 workers gave such individual undertakings and joined work and balance 98 workers refused to give such undertaking and did report for work. It is further the case of the petitioner that some of the workmen who were employees of the Johnson & Johnson even resigned and were removed from the membership of the respondent No.1. The respondent No.1 union vide their letter dated 31st July, 2006 raised a 7 dispute against both the petitioner herein and the erstwhile company Johnson & Johnson. The dispute related to furnishing of an undertaking and the working conditions. The workmen also persisted with their claim that the petitioner were not the employers of the workmen employed at the said undertaking. This stand was opposed by the petitioner claiming that the dispute was non-existent and dispute in relation to employer and employee relationship had not been resolved and as such, the proceedings in furtherance to the notice dated 31st July, 2006 did not continue. 4. During the pendency of the said demand letter, the workmen even filed writ petition before this court. The writ petition, being Civil Writ Petition No.2028 of 2006 came up for hearing before a Division Bench of this court and the same was dismissed vide order dated 29th August, 2006 which reads as under: It is grievance of the petitioner that though they have raised a dispute before respondent No.1 is not taking steps to initiate conciliation proceeding. 8 2. The petitioners earlier were contending that they were employees of M/s. Johnson & Johnson Ltd. And not of respondent No.3. The Industrial Court held against them. The Learned Single Judge, where the petition was filed, has rejected the contention. Appeal preferred before the learned Division Bench has been dismissed. The SLP filed has been withdrawn. In other words, the contention of the respondent No.4 that Johnson & Johnson Limited is their employer stands concluded. 3. On behalf of the petitioners, the learned counsel submits that the order was taken by playing fraud on the Court. It is not for this Court to go into that issue. The petitioners are at liberty to take steps which they may be entitled to. If the matter is before the Conciliation Officer, the Conciliation Officer is bound to proceed according to law. Considering the earlier order of this Court, this would not be a fit case to exercise our extraordinary jurisdiction. 4. The present petition stand dismissed. 5. Parties to act on the authenticated copy.” 5. According to the petitioner, the respondent No.1's contention had not been accepted by any court including the Supreme Court where they withdrew the SLP which was against the order of 9 Division Bench of this court passed in Civil Writ Petition No.1312 of 2004. After passing of the order dated 29th August, 2006, the conciliation proceedings progressed but resulted in filing of failure report which was submitted by Conciliation Officer to respondent No.2. Respondent No.2 thereafter passed the order dated 22nd June, 2007 referring the dispute for adjudication to the Industrial Court at Bombay. The appropriate Government, on the recommendations made by the Labour Commissioner, in whose view the settlement between the parties remained unsuccessful, referred the matter to the Industrial Court vide its order dated 22nd June, 2007. The dispute, as stated in the schedule to the said order, reads as under: “ S C H E D U L E Whether the M/s. PRS Permacel Pvt.Ltd., company's Notice dated 29.7.2006 is legal and justified and whether the action of the company pursuant to Notice dated 29.7.2006 is an illegal Lock-out. If you, what relief, are the workmen entitled to? Whether the workmen are entitled for a direction to the company to allow workmen to perform their 10 normal duties without insisting upon a pre condition that workmen should give/must sign assurance/undertaking for entry in to the said plant at Safed Pool, Andheri Kurla Road, Andheri (E), Mumbai-400 072 for performing their duties on and from 29.7.2006. Whether the workmen are entitled to full wages/salaries and all attendant benefits w.e.f. 29.7.2006.” 6. The legality and correctness of the above order of reference is challenged in this writ petition with the prayers referred herein above. The respondent No.1 has not really controverted the facts except to the extent that the transfer in favour of the petitioner is illegal, bad-in-law and for which they have taken appropriate legal action before the competent forum. Further, it is averred that the undertaking sought by the company had been incorrectly worded but the workmen vide their letter dated 21st September, 2006 even signed an undertaking which clearly postulated that the workmen will continue to give normal production, maintain full discipline and there would be no casualty of discipline due to the contention that the 11 company is not their employer. Despite giving such undertaking, the petitioner has not acted fairly. It is admitted that the demand letter was submitted to the Commissioner on 11.12.2006 as no conciliation was possible despite negotiations and keeping in view the stand of the company firstly, the matter remained under Personal Management Advisory Services which culminated into issuance of letter dated 11.2.2008 vide which the Assistant Commissioner of Labour refused to admit the matter in conciliation in regard to settlement between the parties. 7. Keeping in view the controversy created with regard to employer-employee relationship, during the course of hearing, the Court had observed that the workmen may spell out their clear stand in regard to this aspect of the case. While an affidavit was filed by the Respondent Union on 14th February 2008 wherein besides touching upon the content of the undertaking which they were required to furnish and which they actually furnished, they also stated that all the workmen were ready and willing to work while continuing the 12 discipline and co-operate in meeting normal production standards. Relying upon the order dated 29th August 2006 and a clarificatory order dated 11th September 2006 passed in Writ Petition (Lodging) No. 2028 of 2006 it is stated that the contention of Respondent No.4 in that Writ Petition averred that they were employees of Johnson and Johnson Limited stood concluded. In regard to plea of fraud, they were granted liberty to take steps which they are entitled to. If the matter is before the Conciliation Officer, the Conciliation officer is bound to proceed in accordance with law. They have stated that they will continue to work as if the Petitioner is their employer as they have done continuously since 10th August 1999 but without prejudice to their plea in the other proceedings that they were and continue to be the employees of Johnson & Johnson Limited, as according to them, the transaction that took place was not legal. There are other legal proceedings pending between the parties before the appropriate forum. In the earlier litigations, the parties had approached this Court under Article 226 of the Constitution of India, and vide its order dated 29th August 2006 the Court had specifically noticed that upon the plea 13 of the workmen that they were employees of Johnson & Johnson Limited and not of the present Petitioner. The Industrial Court had not accepted that plea against which order the learned Single Judge rejected the contention. The Appeal before the Division Bench was also dismissed and the Special Leave Petition, as noticed earlier, was also withdrawn. In other words, the contention of the members of the Union stood concluded, but it also proceeded to add that the said order was obtained by playing a fraud and the Petitioners were at liberty to take steps which they were entitled to and if the matter was pending before the Conciliation Officer, he would proceed in accordance with law. While taking some benefits of these observations, the workmen contended that this question has not been concluded finally and can be examined by the appropriate forum in accordance with law. Reliance was also placed upon the notice dated 31st July 2006 served by the Union on 7th August 2006 stating that there was illegal lock out and with a clear clarification that read as under :- 14 “It is clarified that for the purpose of the present demand the dispute relating to employer employee is not being raised and the present letter of demand ought not be considered as a waiver of the right of the workmen to raise such disputes as may be permissible at law including the issues which according to the Companies have allegedly come to an end. It is stated that no employer or person claiming to be employer can prevent approach to court of law for redressal of grievance of workmen. Hope wiser counsel prevails and the workmen are not forced to initiate further proceedings in this regard.” 8. The Petitioner company had also issued a notice dated 17th August 2006 indicating various facets of the litigation in relation to transfer and problem of production and discipline. The consent letter which was required to be executed by the workmen was replied to by the union vide Exhibit “I” stating that they would not execute the same and later submitted the amended undertaking as mentioned above. 9. While relying upon the judgment of the Supreme Court in Haryana State Co-operative Land Development Bank vs. Neelam, 15 (2005) 5 SCC 91, it was contended on behalf of the Petitioner company that the plea of estoppel, waiver and acquiescence are applicable to proceedings before the Labour Court and the scheme of the Act does not exculpate an individual from responsibilities of his conduct. His conduct has to be taken into consideration for granting or declining a relief. As the matter of employee-employer relationship stood fully settled, the order of reference will be vitiated. It is further argued that the High Court is competent to examine validity of a reference as the Industrial Court does not have the power to examine the validity of a reference and it is only to answer or adjudicate the reference. In support of this argument, reliance is also placed on National Engineering Industries vs. State of Rajasthan and others, (2002) 1 SCC 371. The impugned order also suffers from the infirmity of non-application of mind as without determination of employer- employee relationship, the reference is untenable. Support is taken from the judgment of the Supreme Court in Hochtief Gammon vs. State of Orissa and others, AIR 1975 SC 2226. 16 10. According to the Respondent Union, the order of reference is proper and is within the four corners of law. The reference including the dispute of employer-employee is wide open and has not been finally concluded particularly in face of their plea that the orders were obtained by fraud. There is no ambiguity in the order of reference and the Industrial Court/Labour Court has to adjudicate the matter on merits and it will not be appropriate for this Court to examine the question of preliminary objection as regard to maintainability of reference before the Industrial Court particularly in facts and circumstances of the present case. Even when two fora are available, the Courts can certainly say which is the more appropriate forum to effectively get it adjudicated. There has to be, in reality, a relationship between employer and the complainants where they plead unfair labour practice. Industrial dispute has to be raised before the Tribunal under the Industrial Disputes Act for issue relating to actual nature of employment to be sorted out. Reliance is placed on the case of Shambu Natha Goyal vs. Bank of Baroda, 1978 I LLJ 484, Workmen Hindustan Lever Ltd. vs. Hindustan Lever Ltd., (1984) 4 17 SCC 392 and Sarva Shramik Sangh vs. Indian Smelting and Refining Co. Ltd. and others, 2003 (3)CLR 949. 11. In the present Writ Petition, neither we are expected nor do we propose to deal with the merits of the various contentions raised in this Petition which are directly pending before the competent forum. The short question that we need to consider is whether the order of reference dated 22nd June 2007 suffers from such a legal error that it is palpably without jurisdiction or is legally untenable. 12. The appropriate Government, while exercising the powers of making a reference under section 10(1) of the Industrial Disputes Act has limited jurisdiction and cannot travel into the field of determining the controversies on merits by taking the evidence or adjudicating the controversies between the parties. Of course, it may satisfy itself as to the existence of the essential ingredients for making a reference of an industrial dispute to the appropriate forum/court. We may refer to a recent judgment of this Court reported in the case 18 of National Organic Chemical Industries Limited v. State of Maharashtra and others, AIR 2007 Bombay, 188. The Court discussed various judgments of the Supreme Court and the High Courts on the subject and enunciated the principles as under: “5. Having stated the factual metrix of the case we will prefer to examine the law in relation to the ambit and scope of section 10(1) of the Act and the limitations of judicial review in relation to an order of reference referring an industrial dispute to the Labour Court. In the case of Shri Subhash Chand vs. Government of NCT and Ant, reported in 117 (2005) DLT 527, a Division Bench of the Delhi High Court had an occasion to discuss, in some elaboration, the law on the subject. The court has held as under: “Reference to the development of law in this regard is necessitated for the reason that somewhat divergent views have been expressed by the Courts while explaining the scope and limitations of jurisdiction vested in the appropriate Government while exercising its administrative power of making a reference under Section 10(1) (c) of the Act. 6. Reference to the decision of the Constitutional Bench of the Supreme Court in the case of State of Madras v. C.P. Sarathy, 1953 SCR 334 can be ;usefully made at the very outset. It 19 was observed: “But, it must be remembered that in making a reference under section 10(1) the Government is doing an administrative act and the fact that it has to form an opinion as to the factual existence of an industrial dispute as a preliminary step to the discharge of its function does not make it anytheless administrative in character. The Court cannot, therefore, canvass the order of reference closely to see if there was any material before the Government to support its conclusion, as if it was a judicial or quasi-judicial determination. 7. Explaining the ratio of the decision in Sarathy's case (supra), in Western India Match Co.Ltd. v. Western India Match Co. Workers Union, MANU/SC/0375/1970 it was observed as under: “In the State of Madras v. C.P. Sarathy, this Court held on construction of Section 10(1) of the Central Act that the function of the appropriate Government thereunder is an administrative functions. It was so held presumably because the Government cannot go into the merits of the dispute its function being only to refer such a dispute for adjudication so that the industrial relations between the employer and his employees may not continue to remain disturbed and the dispute may be resolved through a 20 judicial process as speedily as possible.” 8. After referring to the earlier decisions on the subject in “Shambhu Nath Goyal v. Bank of Baroda, Julundur, MANU/SC/0283/1978 it was held that “in making a reference under section 10(1), the appropriate Government is doing an administrative act and the fact that it has to corm an opinion as to the factual existence of an industrial dispute as a preliminary step to the discharge of its function does not make it any the less administrative in character.” Thus, there is a considerable body of judicial opinion that while exercising power of making a reference under Section 10(1), the appropriate Government performs an administrative act and not a judicial or quasi-judicial act.” 9. The scope and scheme of Sections 10 and 12 of the Act were also examined by the Supreme Court in State of Bombay v. K.P. Krishnan and Ors., MANU/SC/0999/1960. It was held therein as under: “Even if the appropriate Government may be acting under section 12(5) by itself and independently of Section 10(1) does not confer power on the appropriate Government to make a reference. While deciding whether a reference should be made under section 12(5) it would be open to the appropriate Government to consider, besides the report of the Conciliation Officers other relevant facts which may come to its knowledge or which may be brought to its notice. Just 21 as discretion conferred on the Government under section 10(1) can be exercised by it in dealing with industrial disputes in regard to non-public utility services even when Government is acting under Section 12(5), so too the provisions of the second proviso to Section 10(1) can be pressed into service by the Government when it deals with an industrial dispute in regard to a public utility service under Section 12(5).” 10. It was further held by the Supreme Court that “whether Section 12(5) is construed as making it obligatory on the Government to make a reference when it is satisfied that there is a case for reference or as only conferring a discretion, if in refusing to make a reference Government is influenced by reasons which are wholly extraneous or irrelevant or which are not germane, then its decision may be open to challenge in a court of law. Though considerations of expediency cannot be excluded when Government considers whether or not it should exercise its power to make a reference it would not be open to the Government to introduce and rely upon wholly irrelevant or extraneous considerations under the guise of expedience. ....................................... 32. It appears to be a settled principle of law that while the appropriate Government is exercising 22 its power to make a reference under Section 10(1) of the Act, such power is wide but has definite limitations in terms of the prescribed law. The Government would form an opinion as to relationship, and whether a dispute exists or is apprehended. This exercise of power is purely administrative in nature and must clearly be understood with definite distinction from a judicial or a quasi judicial power. Government cannot abrogate on to itself the power to adjudicate any question. The formation of opinion has to be prima facie based upon records before the Authority as well as the report submitted by the Conciliation Officer under Section 12 of the Act. An element of expeditious disposal and determination of industrial dispute is contemplated under various provisions of the Act and even in a case under Section 12(6) of the Act where the Conciliation Officer is required to submit a report within 15 days of the commencement of conciliation proceedings. For granting any extension of time there is a