1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION APPEAL NO.81 OF 1999 IN WRIT PETITION NO.287 OF 1995 Hindustan Lever Limited having its Registered Office at 165/166, Backbay Reclamation, Mumbai - 400 020 and its Factory at Haji Bunder, Sewree, Bombay - 400 015. .. Appellant. V/s. 1. Hindustam Lever Employees Union, having its Office at C/o. Hindustan Lever Ltd., Haji Bunder, Sewree, Mumbai - 400 015. 2. B.S. Bhadange, Member, Industrial Court, Arun Chambers, Tardeo, Mumbai - 400 034. .. Respondents. Mr.P.K. Rele, Senior counsel with Mr.Rajesh Rele and Mr.Vinod Tayde i/b. Mr.Piyush Shah for the appellant. Mr.K.K. Singhvi, Senior counsel with Ms.Meena Doshi i/b. Mr. K.S. Bapat for respondent No.1. CORAM : R.M. LODHA, & J.P. DEVADHAR, JJ. DATED : 20/21 DECEMBER, 2004. ORAL JUDGMENT : (Per R.M. Lodha, J.) . The first respondent Hindustan Lever Employees Union (for short ‘the Union’) filed a complaint of unfair labour practice against the appellant (for short ‘the employer’) under item 9 of 2 Schedule IV of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 (for short ‘Act of 1971’). The complaint was resisted by the employer. The Industrial Court, Bombay after recording the evidence and hearing the parties allowed the complaint vide its order dated 5th January, 1995. The operative order reads thus : "i) Complaint is allowed. ii) It is hereby declared that the Respondents have committed an unfair labour practice under item 9 of Sch. IV of MRTU & PULP Act, 1971. They should cease and desist from engaging in the said unfair labour practice. iii) It is further declared that discontinuation of lines in Hard Soaps Department, a Section of Toilet Soaps Departments, Printing Department and the closure of E.P.C. (Machine Building) Department and the Sulphanation Department, is illegal. iv) The Respondent’s are further directed to not to close down the Departments or redeploy the workmen without following due process of law. . No order as to costs." 2. Upset by the order of the Industrial Court, the employer filed writ petition which came to be dismissed by the learned single Judge vide his judgment dated 3rd/4th December, 1998. The employer has come up in appeal. 3 3. The learned senior counsel for the employer and the union argued the matter extensively. They took us through pleadings, the evidence, the judgment of the Industrial Court, the judgment of the learned single Judge and also the large number of authorities. Collectively they consumed more than 10 hours of Court time. Was it necessary ? We leave it to the learned senior counsel to ponder. 4. On the basis of the arguments advanced before us by the learned senior counsel, the points that emerge for our consideration are: (one) whether the learned Single Judge committed illegality in permitting the union to raise the plea that individual settlements entered into between the employer and the individual workman were not legal; (two) whether the setlements entered into between the employer and the individual workman were legal and binding; (three) whether the action of the employer in discontinuation of Hard soaps department, Sulphanation department, packaging department etc. and the redeployment of the employees and non-payment of incentives amounted to change of their service conditions covered by items 1, 10 and 11 of the fourth schedule of ID Act for which notice under 4 section 9A was necessarily required; and (four) whether para 3 of the operative order of the Industrial Court was warranted and legally sustainable. 5. Mr.P.K. Rele, the learned senior counsel for the employer relied upon large number of authorities viz., (i) Workmen of M/s.P.M. Moodaliar & Sons V/s. The Management of M/s.P.M. Moodaliar & Sons & Another (1975 LIC 1135), (ii) Workmen of Firestone Tyre & Rubber Co. of India (P) Limited V/s. The Firestone Tyre & Rubber Co. (1976 I LLJ 493), (iii) M/s. Ameteep Machine Tools V/s. Labour Court, Haryana & Another (1980 [Supp] SCC 355), (iv) Federation of Small & Medium Industries & Another V/s. Their Workmen & Ors. (1972 LIC 1275), (v) Glass Division Kamgar Sangh & Another V/s. State of Maharashtra & Another (1998 II CLR 803), (vi) Hindustan Lever Limited V/s. Hindustan Lever Mazdoor Sabha (2001 I CLR 432), (vii) Workmen of Sudder Workshop of Jorehaut Tea Co. Ltd. V/s. The Management of Jorehaut Tea Co. Ltd (1980 II LLJ 124),(viii) Shankar Chakravarti V/s. Britannia Biscuit Co. Ltd. & Another (AIR 1970 SC 1652), (ix) JK Iron & Steel Co. Ltd. V/s. Iron & Steel Mazdoor Union & Another (1956 I LLJ 227), (x) S.S. Sharma & 5 Others V/s. Union of India & Others (1981 LIC 131), (xi) Northbroke Jute Co. Ltd. & Another V/s. Their workmen (1960 I LLJ 580), (xii) The workmen of the Food Corporation of India V/s. Food Corporation of India (AIR 1985 SC 670), (xiii) D. Macropolo & Co.(Pvt.) Ltd. V/s. Their Employees’ Union & Others (1958 II LLJ 492), (xiv) M/s. Parry & Co. Ltd. V/s. P.C. Pal & Others (1970 II LLJ 429), (xv) Hindustan Lever Employyes’ Union V/s. State of Maharashtra & Others (1989 II CLR 420), (xvi) Hindustan Lever Employees’ Union V/s. State of Maharashtra & Others (1993 II CLR 847), (xvii) Hindustan Lever Ltd. V/s. Ram Mohan Ray & Others (1973 I LLJ 427), (xviii) Ghatge & Patil Concerns’ Employees’ Union V/s. Ghatge & Patil (Transports) Pvt. Ltd. & Another (1968 SC 503), (xix) Shanker Pandurang Jadhav & Others V/s. Vice Admiral, Flag Officer, Commanding-in-Chief & Others (1991[62] FLR 387), (xx) Gulf Air, Bombay V/s. S.M. Vaze, Member, Industrial Court & Others (1994 II CLR 292), (xxi) Shankar Prasad V/s. Lokmat Newspapers Pvt.Ltd., Nagpur (1997 I LLJ 195), (xxii) Hindustan Lever Ltd. V/s. State of U.P. & Others (2000 II CLR 814), (xxiii) J.K. Cotton Spg. & Wvg. Mills Co. Ltd., Kanpur V/s. State of U.P. & Others (1990 II CLR 542), (xxiv) Alarsin and Alarsin Marketing Employees’ 6 Union V/s. Alarsin Pharmaceuticals and Alarsin Marketing Pvt. Ltd. & Another (2004 (III) LLJ 870) and (xxv) unreported judgment of the learned single Judge of the Madras High Court in Writ Petition No.1471 of 1999 and connected writ petition in the case of Management of Binny Limited V/s. The Presiding Officer, Industrial Tribunal, Chennai decided on February 29, 2000. 6. Mr.K.K. Singhvi, the learned senior counsel for the union relied upon the following judgments : . (i) Northbrook Jute Company Ltd and Another V/s. Their Workmen (1960 I LLT 580), (ii) Lokmat Newspapers Limited V/s. Shankarprasad (1999 II CLR 433), (iii) Tata Iron & Steel Co. Ltd. V/s. Their Workmen (1972 II LLJ 259), (iv) P.V. Mani V/s. Union of India & Others (AIR 1986 Kerala 86), (v) P. Virudhchalam & Others V/s. Management of Lotus Mils & Another (1998 I CLR 1), (vi) Ram Prasad Vishwakarma V/s. Chairman Industrial Tribunal (AIR 1961 SC 857), (vii) Central Provinces Transport Services Ltd., V/s. Raghunath Gopal (AIR 1957 SC 104), (viii) Watern India Match Co. Ltd. V/s. Its Workman (1973 (II) LLJ 403), (ix) Brooke Bond India Limited V/s. 7 Workmen (1981 III LLJ 184 SC), (x) Raza Buland Sugar Co. Ltd. V/s. Their Workmen (1972 II LLJ 35), (xi) Commissioner of Income Tax V/s. Holman Climan Mfg. Ltd., Calcutta (1991 LIC 2195), (xii) Ganesh Chandra Jha V/s. Steel Authority Ltd. (1992 LIC 780), (xiii) New India Flour Mills V/s. Industrial Tribunal West Bengal & Others (1963 I LLJ 745), (xiv) Workmen of Meenakshi Mills Ltd. V/s. Meenakshi Mills Ltd. & Another (1992 I CLR 1010), (xv) Food Corporation of India Workers Union V/s. Food Corporation of India & Another (1996 (9) SCC 439), (xvi) Workmen of M/s.Delhi Cloth General Mills Ltd. V/s. The management of M/s. Delhi Cloth and General Mills (1970 LAB IC 1407), (xvii) The Bata Shoe Co. (P) Ltd. V/s. D.N. Ganguly & Others (AIR 1961 1158) and (xviii) Tarini Kamal Pandit & Others V/s. Prafulla Kumar Chatterjee [(1979) 3 SCC 280). He also relied upon the judgments in the case of Ram Mohan Ray (supra), Workmen of Food Corporation of India (supra) and Shanker Pandurang Jadhav (supra) relied upon by Mr.P.K. Rele. 7. We shall now refer to the necessary facts. The Union filed the complaint being complaint (ULP) No.855 of 1989 against the employer under item 9 of Schedule IV of MRTU & PULP Act 1971 before the 8 Industrial Court, Maharashtra, Bombay in the month of July 1989. The complaint alleged that the employer had committed unfair labour practice on 22nd June 1989 and were continuing to engage in unfair labour practice under item 9 of Schedule IV of the Act of 1971. The employer has a factory at Sewree and employ 3000 employees. The Sewree factory consists of number of departments viz; Vanaspati plant, the soapary department, the hard soaps department, the toilet soaps department the sulphenation plant, the packaging department etc. The employer declared the lock out of its employees at the Sewree factory on and from 22nd June 1988. During the lock out period the employer made number of demands upon the Union. By their notice dated 22nd June 1989 the employer lifted the lock out and permitted all the employees to report back for their normal duties. According to the Union, on resumption of their duties by the workmen, the Union found that the employer has closed down several departments or several parts of the departments. In the Hard Soaps Department where hard soaps under the brand name of ‘Sunlight’ and ‘Lifebuoy’ were being manufactured, three lines of hard soaps and three lines of toilet soaps machines in Hard Soap department were stopped, thus, closing down six lines in the Hard soap department. It was 9 also found that the employer had closed down two lines of toilet soaps department and dismantled three Rose Wrapping Machines, three Jone Stamper Machine, Mazzeni Machines 2 and 3, Conveyer Belt and T.S.M. Machine. The employer had also closed down the printing department employing about 18 workmen. The EPCC (Machine Building Department), Telcum Department and Sulphanation Plant were also closed. According to the Union, the closure of these departments had resulted in extensive redeployment of workmen from one department to the other. The closing down of departments and redeployment of workmen amounted to rationalisation and the said rationalisation was likely to lead to retrenchment because of surplus workforce. The Union alleged in the complaint that the workmen working in certain departments were getting incentive wages. Now such workmen have been deployed to the departments and the places where there was no incentive payment. As a result of closure of departments and redeployment, the wages and allowances of the workmen have been adversely affected. The Union averred in the complaint that redeployment, re-classification and rationalisation were contrary to subsisting settlements. The closure of departments, rationalisation and reduction in wages and allowances are subject matters of Schedule 10 IV of the Industrial Disputes Act, 1947. The employer did not give any notice of change under Section 9A of the Industrial Disputes Act, 1947 and, therefore, the act of the employer in closing down the said departments or part of it was contrary to the provisions of law and illegal. The Union alleged that the workmen in skilled grades have been directed to perform semi skilled jobs and workmen requiring definite mental, physical and intellectual ability are required to do jobs inconsistent with the mental, physical and intellectual requirements as set out in the settlements. The Union, thus, in the complaint prayed that it be declared that the employer has engaged in unfair labour practice under item 9 of Schedule IV of the Act of 1971; that the employer be directed to cease and desist from engaging in unfair labour practice complained of; that the closure of a section of Hard soaps department, the printing department, talcum power and shampoo department, the E.P.C. (Machine Building) department and the Sulphanation department was illegal and the employer be directed not to close down departments or redeploy workmen save and except by following the provisions of law and in accord with the Standing Orders and the subsisting settlements. 11 8. The employer contested the complaint by filing written statement. According to the employer, the lock out of the Sewree plant was effected from 22nd June 1989. It became necessary due to continuous go-slow for about 17 months proceeding the lockout resulting in production loss of Rs.100 crores. After the imposition of lockout several meetings were called by the Labour Department of the Government of Maharashtra. Ultimately at the behest of the then Chief Minister Shri Sharad Pawar on 19th June, 1989 it was agreed by the Union and the Management that the workmen would lift the lockout on certain conditions. The employer submitted that the Union agreed to the conditions as discussed in this tripartite meeting and the terms were chalked out and the notice was put up on 22nd June 1989 together with the copy of the draft agreement under Section 2(p) of the Industrial Disputes Act, 1947 to be entered into with the individual workman/the Union as a pre-condition for lifting the lockout. The Union backed out and did not sign the agreement but the individual workmen signed the agreement. According to the employer as a pre-condition to the lifting of the lock out, it was absolutely necessary that the Union and its workmen agreed to redeployment to meet the business exigencies regarding existing and new 12 products as also to the introduction of new products/processes/technologies and improved system of work. The employer committed that such redeployment will not lead to any retrenchment of the workmen. The employer asserted that deployment in terms of clause 2 of the agreement was made and no workman was redeployed which was not commensurate with his skill and grade. The employer reiterated that no workman has been retrenched and that it will not retrench any workman in future. According to the employer, it was only in the interest of business exigencies and on the demand for the products and with a view to modernise and make the unit run viably it had become necessary to remove certain machinery and as such dismantling and removal of such machinery did not and does not constitute any unfair labour practice. The employer averred that the operations which became irrelevant in the present context keeping in view volume/technological changes/environment and commercial necessity, have been discontinued in order to run the unit viably. The employer denied that their said acts amounted to rationalisation. They also denied that the said rationalisation was likely to lead retrenchment in future and/or lead to surplus workforce. The employer submitted that the workmen had no vested 13 right to receive incentive wages as such, and, therefore, the Union cannot complain if the workmen were not earning their incentive wages more particularly in view of the clause of the settlement wherein the workmen agreed to get themselves redeployed. The employer denied that the closure of departments and redeployment, reclassification and rationalisation were contrary to the subsisting settlements. According to them, they have not done anything which required any notice to be given under Section 9A of the Industrial Disputes Act, 1947. They denied that the workmen have been asked to perform duties which were not consistent with their grades or classification. The employer submitted that the individual workman had entered into the settlement and they agreed redeployment as also for introducing new machinery and new method of working. The employer, thus, prayed that the complaint be dismissed. 9. On behalf of the Union, the affidavit of Bennet D’Costa in lieu of examination-in-chief was filed and he was cross-examined by the employer’s advocate. On the other hand, on behalf of the employer the affidavit of Rajesh Kumar Lal, by way of examination-in-chief was filed. He was 14 cross-examined by the advocate for the Union. 10. The parties also produced large number of documents before the Industrial Court. 11. The Industrial Court considered the material and evidence before it and after hearing the advocates for the parties vide its Judgment dated 5th January 1995 held that the case was not a case of closure as explained and defined under the Industrial Disputes Act, but it was a case of rationalisation and re-organisation of the business. By closing some of the departments and by discontinuing some of the lines, service conditions of the employees were adversely affected and it was obligatory and necessary on the part of the employer to give notice under Section 9A of the Industrial Disputes Act which the employer failed to give. The Industrial Court also held that redeployment of the employees in other departments resulted in change of service conditions adversely affecting them. The Industrial Court came to the conclusion that the individual settlement arrived between the individual employee and the employer was of no help to the employer and did not take away the obligation on the part of the employer to give notice under Section 9A. The Industrial 15 Court, accordingly, allowed the complaint and declared that the employer had committed an unfair labour practice under item 9 of Schedule IV of MRTU & PULP Act, 1971 and they should cease and desist from engaging in the said unfair labour practice. The Industrial Court also declared that discontinuation of lines in Hard Soaps department, section of toilet soaps departments, printing department and the closure of E.P.C.(Machine Building) department and the Sulphanation department was illegal and directed the employer not to close down these departments or redeploy the workmen without following due process of law. 12. The employer filed the writ petition before this court and as noticed above, the said petition was dismissed. The learned Single Judge held that the individual settlement entered into between the employer and the employee was illegal. The learned Single Judge affirmed the order of the Industrial Court. 13. Now we turn to the points that arise for our consideration. 15. Re: (one) Re: (one) Re: (one) 16 . It is true that the Industrial Court did not go into the aspect whether the individual settlements were illegal and void. While defending the order of the Industrial Court, in opposition to the writ petition filed by the employer, the Union set up the case that individual settlements were void and illegal. Though the counsel for the employer objected to such contention being raised for the first time in the writ petition, the learned Single Judge found that question being a pure question of law, the parties could be permitted to address the Court on this aspect. We do not find any infirmity in the permission granted by the learned Single Judge. The legality and validity of the individual settlements was required to be seen in the light of the provisions contained in Sections 2(p), 2A, 18 and 36 of the Industrial Disputes Act, 1947 and Rule 62 of the Industrial Disputes (Bombay) Rules, 1957. No determination of facts was required. The facts pertaining to the individual settlements were already set out in the written statement filed by the employer. In the affidavit of Bennet D’Costa, the General Secretary of the union, it is stated that individual settlements are illegal, obtained under coercion, against the public policy and void. It 17 cannot be said that the employer was put to surprise on the face of the aforesaid case set up in the evidence of the Union. In the circumstances, therefore, the consideration of legality and validity of individual settlements by the learned Single Judge for the first time in the writ petition was not something to which serious objection could be raised. We, accordingly, overrule the objection of Mr.P.K.Rele that the learned Single Judge ought not to have granted permission to the Union to raise the plea of legality and validity of individual settlements in the writ petition. 15. Re: (two) Re: (two) Re: (two) . The question of validity and legality of individual settlements has attained importance in the light of the defence of the employer that the controversial changes were effected in pursuance of individual settlements and, therefore, no notice under Section 9A was necessary. 16. Section 2(p) defines "settlement" thus: "settlement" means a settlement arrived at in the course of conciliation proceeding and includes a written agreement between the employer and workmen arrived at otherwise than in the course of 18 conciliation proceeding where such agreement has been signed by the parties thereto in such manner as may be prescribed and a copy thereof has been sent to an officer authorised in this behalf by the appropriate Government and the conciliation officer." 17. Section 2(s) defines "workman" which reads thus: "workman" means any person (including an apprentice) employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward, whether the terms of employment be express or implied, and for the purposes of any proceeding under this Act in relation to an industrial dispute, includes any such person who has been dismissed, discharged or retrenched in connection with, or as a consequence of, that dispute, or whose dismissal, discharge or retrenchment has led to that dispute, but does not include any such person - (i) who is subject to the Air Force Act, 1950 (45 of 1950), or the Army Act, 1950 (46 of 1950), or the Navy Act, 1957 962 of 1957); or (ii) who is employed in the police service or as an officer or other employee of a prison; or (iii) who is employed mainly in a managerial or administrative capacity; or (iv) who, being employed in a supervisory capacity, draws wages exceeding one thousand six hundred rupees per mensem or exercises, either by the nature of the duties attached to the office or by reason of the powers vested in him, functions mainly of a managerial nature." 19 18. By virtue of Section 2A which was introduced in the ID Act with effect from 01.12.1965 provides that the dismissal etc. of an individual workman is to be deemed to be an industrial dispute. It reads thus: "2A. Dismissal, etc., of an individual Dismissal, etc., of an individual Dismissal, etc., of an individual workman to be deemed to be an industrial workman to be deemed to be an industrial workman to be deemed to be an industrial dispute. dispute. dispute. - Where any employer discharges, dismisses, retrenches or otherwise terminates the services of an individual workman, any dispute or difference between that workman and his employer connected with, or arising out of, such discharge, dismissal, retrenchment or termination shall be deemed to be an industrial dispute notwithstanding that no other workman nor any union of workmen is a party to the dispute." 19. Section 9A requires an employer to give notice in respect of any change in the conditions of service as provided therein. It reads thus: "9A. Notice of change. - Notice of change. - Notice of change. - No employer, who proposes to effect any change in the conditions of service applicable to any workman in respect of any matter specified in the Fourth Schedule, shall effect such change, - (a) without giving to the workmen likely to be affected by such change a notice in the prescribed manner of the nature of the change proposed to be effected; or (b) within twenty-one days of giving such notice: Provided that no notice shall be required for effecting any such change - 20 (a) where the change is effected in pursuance of any settlement or award; or (b) where the workmen likely to be affected by the change are persons to whom the Fundamental and Supplementary Rules, Civil Services (Classification, Control and Appeal) Rules, Civil Services (Temporary Service) Rules, Revised Leave Rules, Civil Service Regulations, Civilians in Defence Services (Classification, Control and Appeal) Rules or the Indian Railway Establishment Code or any other rules or regulations that may be notified in this behalf by the appropriate Government in the Official Gazette, apply. 20. Section 18 provides for the persons on whom settlements and