IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION CIVIL APPELLATE JURISDICTION CIVIL APPELLATE JURISDICTION WRIT PETITION NO.3505 OF 2008 WRIT PETITION NO.3505 OF 2008 WRIT PETITION NO.3505 OF 2008 Nicholas Piramal India Limited ) A Company incorporated under ) The provision of the Companies ) Act, 1956 and having its office ) Nichoclas Piramal Tower, ) Ganpatrao Kadam Marg, Lower ) Parel, Mumbai 400 013. )..Petitioner. V/s. Nicholas Employees Union, 48. ) Chanchal Smruti, Katrak Road, ) Wadala, Mumbai - 400 031. )..Respondent. WITH WITH WITH ORIGINAL SIDE ORIGINAL SIDE ORIGINAL SIDE WRIT PETITION NO.1304 OF 2008 WRIT PETITION NO.1304 OF 2008 WRIT PETITION NO.1304 OF 2008 Nicholas Employees Union, having ) its office at 48, Chanchal Smruti, ) Katrak Wadala Road, Mumbai-400 031. )..Petitioner. V/s. 1. M/s. Nicholas Piramal India Ltd. ) having its registered office ) Nichoclas Piramal Tower, ) Ganpatrao Kadam Marg, Lower ) Parel, Mumbai 400 013. ) ) 2. Mr. Ajay Piramal, Chairman ) Nichoclas Piramal Tower, ) Ganpatrao Kadam Marg, ) Lower Parel, Mumbai 400 013. ) ) 3. Mr.D.B.Shelarkar, General ) Manager -HRD, Haemaccel Plant, ) M/s.Nicholas Piramal India Ltd. ) L.B.S.Marg, Mulund (W), ) Mumbai 400 080. ) ) 4. Mr.A.B.Khot, GM Mfg. Operations ) (Haemaccel) Nicholas Piramal ) - = : 2 : = - India Ltd., L.B.S. Marg, ) Mulund (W), Mumbai - 400 080. ) ) 5. Mr.Adhir Mane, Vice President ) H.R. Nicholas Piramal India Ltd. ) Nichoclas Piramal Tower, ) Ganpatrao Kadam Marg, Lower ) Parel, Mumbai - 400 013. ) Mr.J.P.Cama, senior Advocate i/b. M/s. Haresh Mehta for Company. Mr.Arshad Shaikh, Advocate with Piyush Shah for Union. CORAM : J.P.DEVADHAR, J. CORAM : J.P.DEVADHAR, J. CORAM : J.P.DEVADHAR, J. DATED : 3RD JULY, 2008. DATED : 3RD JULY, 2008. DATED : 3RD JULY, 2008. JUDGMENT JUDGMENT JUDGMENT 1. In these two Writ Petitions the interim order passed by the Industrial Court, Mumbai on 5/5/2008 in Complaint (ULP) No.118 of 2008 is challenged. By the said interim order, the Industrial Court has rejected the application of the Complainant-Union by declining to stay the transfer of the employees from Mulund in Mumbai to Baddi in Himachal Pradesh except in the case of 7 employees. 2. Complaint (ULP) No.118 of 2008 was filed by the Nicholas Employees Union (‘Union’ for short) alleging unfair labour practice on the part of Nicholas Piramal India Ltd. (‘Company’ for short) - = : 3 : = - in closing the Mulund Unit and transferring the permanent employees working in the Mulund Unit to Baddi a place in Himachal Pradesh. The Union contended that the decision of the Company in shifting the Mulund Unit and consequently transferring the employees is vitiated by malafides and constituted unfair labour practice under the MRTU & PULP Act, 1971. As the Industrial Court declined to grant interim relief except in the case of 7 employees, both the Company as well as the Union have filed these two Writ Petitions. 3. Writ Petition No.3505 of 2008 is filed by the Company to challenge the order of the Industrial Court in so far as it relates to directing the Company to absorb 7 employees of the Mulund Unit at its other establishments of the Company in Mumbai / Thane region. Writ Petition No.1304 of 2008 is filed by the Union to challenge the order of the Industrial Court in so far as it relates to declining to stay the transfer of the remaining 19 employees. 4. Since both the Writ Petitions arise from a common order passed by the Industrial Court dated 5/5/2008, both the writ petitions are admitted and heard finally by consent of the parties and disposed - = : 4 : = - of by this common Judgment. 5. The Company is engaged in the business of manufacturing and marketing various pharmaceutical products. For that purpose, the Company has established various units in Maharashtra, Madhya Pradesh, Himachal Pradesh, Andhra Pradesh and Tamil Nadu. 6. The dispute in the present case, relates to Haemaccel Plant at Mulund (‘Mulund Unit’ for short) which was acquired by the Company in the year 2000, from Hoechst Marion Roussel Ltd. In the said plant, life saving drug known as ‘Haemaccel’ was manufactured. 7. The Company had acquired the Mulund Unit consisting of plant and machinery and not the labour force attached to it. Therefore, for running the newly acquired Mulund Unit, the Company transferred some employees from its Deonar Unit to the Mulund unit. The Company had also hired the services of some of the technical staff on contract basis, who were working in the said unit prior to the acquisition, so as to train the employees who were transferred from Deonar Unit to Mulund Unit. It is not in dispute that the employees transferred from - = : 5 : = - the Deonar Unit as well as the technical staff hired from Hoechst Marion Roussel Ltd. continued to work in the Mulund Unit till the operations were closed in March, 2008. 8. It may be noted that these employees who were transferred from the Deonar Unit had challenged their transfer to the Mulund Unit by filing a Complaint through their Union under the MRTU & PULP Act and in those proceedings, a Division Bench of this Court by an order dated 19/1/2004 directed that during the pendency of the complaint, the services of the employees transferred from Deonar Unit to the Mulund Unit shall not be terminated without first seeking permission of the Court. The said complaint is still pending. Accordingly, since 2000 the employees transferred from the Deonar Unit have been working in the Mulund Unit. 9. Some time in April 2007, these transferred employees working in the Mulund Unit became apprehensive that the company may close the Mulund unit. The Union representing these employees addressed a letter to that effect to the Company on 26/4/2007. By its letter dated 29/5/2007 the Company informed the Union that there is no basis for such apprehension and if any action contemplated - = : 6 : = - by the Company has adverse impact on the workmen, then the same will be done by following the due process of law. 10. Thereafter, the Company by its letter dated 1/2/2008 called upon the Union leaders to attend a meeting inter alia to discuss the issue relating to the shifting of the Mulund Unit. In the said meeting, the Union leaders were informed that the Company has decided to shift the Mulund Unit to their factory site at Baddi in H.P. due to business exigencies. The basic reason given for shifting the unit was that the Form Fill and Seal (FFS) Machine at Mulund Unit used for manufacturing ‘Haemaccel’ has the capacity to manufacture 40 lakh bottles per year whereas it is utilised only to the extent of 18 lakhs bottles per year. To utilise the FFS machine to its full capacity at Mumbai, it would be necessary to modernise the Mulund unit and for that purpose, the Unit will have to be shut for atleast 6 months for modernisation which will lead to short supply of life saving drug manufactured at the said unit. Moreover, modernisation of the Mulund unit would mean incurring huge expenditure which can be avoided by shifting the Unit from Mulund to Baddi in H.P. where the requisite infrastructure is readily available with the Company. Further, shifting of - = : 7 : = - the unit from Mulund to Baddi in H.P. would give the company tax benefits as also other benefits. The Company informed the Union that the dismantling work of the Mulund Unit would commence from 1/3/2008. The Union leaders were informed that the permanent employees in the Mulund Unit would be transferred to Baddi with effect from 1/3/2008 on the existing terms and conditions of service. It was further intimated that the reasonable travelling expenditure from Mumbai to Baddi would be borne by the Company and temporary accommodation would also be provided to these employees. 11. Challenging the action of the company, complaint (ULP) No.118 of 2008 was filed by the Union alleging that closing the Mulund and transferring the 26 permanent employees from Mulund in Mumbai to Baddi in the State of H.P. was vitiated by malafides and constituted unfair labour practice covered under section 28 read with item 5 of schedule II and items 3, 9 & 10 of schedule IV of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 (‘MRTU & PULP Act’ for short). In the said complaint, an application was filed by the Union seeking an order that the transfer of the employees from Mulund to Baddi in the State of Himachal - = : 8 : = - Pradesh be stayed till the disposal of the complaint. 12. By the impugned order dated 5/5/2008 the Industrial Court rejected the application for stay by holding that, prima facie, as per service conditions the company had a right to shift the plant and machinery from the Mulund Unit along with its employees and that the company has prima facie taken all necessary steps in arranging for the transfer of its employees and their accommodation which are reasonably expected from an employer. In spite of holding that no case was made out for staying the transfer, the Industrial Court on humanitarian grounds directed the company to absorb 7 out of the 26 employees in other establishments of the company in Mumbai / Thane region and as regards remaining 19 employees, the Industrial Court held that their transfer to Baddi will be subject to the outcome of the complaint. Challenging the aforesaid order, both the company as well as the union have filed the aforesaid two petitions. 13. Mr.Arshad Shaikh, learned counsel appearing on behalf of the Union submitted that the action of the Company in closing the Mulund Unit and shifting the machinery to Baddi in H.P. and - = : 9 : = - directing the employees of the company working in the Mulund Unit to report for duty at Baddi is in gross abuse of the process of law and is vitiated by malafides. He submitted that since prima facie case of malafides and unfair labour practice was made out, the Industrial Court ought to have stayed the transfer of all the employees during the pendency of the complaint. 14. Elaborating his arguments, Mr.Shaikh submitted that the action of the Company is vitiated by legal malafides as well as factual malafides. The legal malafides are that in the absence of any clause in the service conditions, the Company could not have transferred the employees from Mulund to Baddi. In the appointment letters issued by the Company to all these 26 employees, nowhere it is stated that their services are liable to be transferred to an establishment which may be set up, established or acquired at any time in the future. As the Unit at Baddi has been established in the year 2008, that is subsequent to the appointment of these 26 permanent employees, the Company could not have transferred these employees to Baddi. He submitted that while engaging the services of the technical staff on contract basis in the year 2000, the Company had specifically incorporated a clause - = : 10 : = - in the appointment letter to the effect that their services are liable to be transferred to an establishment which may be set up, established or acquired at any time in future. Thus, wherever the Company wanted to transfer the employees to any future establishment, a specific clause was incorporated to that effect in the appointment letter itself. Therefore, transferring these 26 employees from Mulund to Baddi without there being any clause to that effect in the service condition constitutes legal malafides on the part of the Company and, therefore, the Industrial Court ought to have stayed the transfer orders of all the permanent employees from Mulund to Baddi. In this connection, he relied upon a decision of the Apex Court in the case of Kundan Sugar Mills V/s. Kundan Sugar Mills V/s. Kundan Sugar Mills V/s. Ziyauddin Ziyauddin Ziyauddin reported in AIR 1960 S.C. 650 AIR 1960 S.C. 650 AIR 1960 S.C. 650 as well as decisions of this Court in the case of Crest Crest Crest Communication Limited V/s. Ms. Sheetal Shenoy Communication Limited V/s. Ms. Sheetal Shenoy Communication Limited V/s. Ms. Sheetal Shenoy reported in 2001 II CLR 1036, Maharashtra General 2001 II CLR 1036, Maharashtra General 2001 II CLR 1036, Maharashtra General Kamgar Union V/s. All India Handloom Fabrics Kamgar Union V/s. All India Handloom Fabrics Kamgar Union V/s. All India Handloom Fabrics Marketing Coop. Society Limited Marketing Coop. Society Limited Marketing Coop. Society Limited reported in 1991 II 1991 II 1991 II CLR 293, Group Pharmaceuticals Limited V/s. Blossom CLR 293, Group Pharmaceuticals Limited V/s. Blossom CLR 293, Group Pharmaceuticals Limited V/s. Blossom Godinho Godinho Godinho reported in 1998 I LLJ 1182 and P.T.I. Ltd. 1998 I LLJ 1182 and P.T.I. Ltd. 1998 I LLJ 1182 and P.T.I. Ltd. V/s. P.T.I. Employees Union V/s. P.T.I. Employees Union V/s. P.T.I. Employees Union reported in 2002 III 2002 III 2002 III CLR 879. CLR 879. CLR 879. - = : 11 : = - 15. Mr.Shaikh further submitted that apart from the legal malafides, the transfer order suffers from factual malafides, because, when Mulund unit was running smoothly and was making profits, there was no need to close the unit and shift the machinery. Even if the Company wanted to enhance the production, it could be done at the existing Mulund Unit and there is nothing on record to suggest that the modernisation of the said Unit was necessary. In fact upgradation of the Mulund Unit was done from time to time to meet the standards prescribed by the Food & Drug Administration. Moreover, the transfer order has been issued without application of mind and without considering as to whether any employee is due to retire in the near future and whether there were exceptional circumstances such as serious ailment, family problems, etc. of the employees. Even an employee who is due to retire in the first week of July, 2008 is also transferred. Three lady employees who had put in more than 35 years of service had serious family problems and there were three employees having heart problem. None of these factors have been considered by the Company and, therefore, the Industrial Court had to interfere and stay their transfer. Thus, closing the Mulund Unit without any justification was vitiated by factual malafides. - = : 12 : = - Assuming that there was any commercial expediency in closing the Mulund Unit, the Company ought to have absorbed these 26 employees in its other establishments in Mumbai - Thane Region as these employees were transferred from Deonar Unit and in the proceeding relating to that transfer, this Court by its order dated 19-1-2004 had directed the Company to obtain prior permission from the Court in case the Company decided to close the Mulund Unit during the pendency of the Complaint. Even though the Company has decided to close the Mulund Unit, with a view to avoid seeking approval of this Court, the Company claims to have ‘shifted’ the Mulund Unit when in fact it had decided to close the Mulund Unit. Therefore, the action of the Company which is vitiated by legal and factual malafides ought to have been stayed by the Industrial Court. 16. Mr.Shaikh further submitted that in the proceeding relating to the transfer of these employees from the Deonar Unit to the Mulund unit, the Company had filed an affidavit stating that the transfer from Deonar unit to Mulund Unit was in the interest of the employees as it was in the nature of having a permanent job in Mumbai. In spite of the above solemn statement on oath, it was not open to the Company to transfer these employees from Mumbai - = : 13 : = - to Baddi in the State of H.P. 17. Mr.Shaikh further submitted that the fact that the services of the technical staff hired from the Hoechst Marion Roussel Limited have been discontinued from March 2008 clearly shows that the Company has in fact decided to close the Mulund Unit and the contention that the Mulund Unit has been shifted is totally false, because, without the technical staff it is impossible to run the unit at Baddi. Moreover, when the Company does not have requisite licence to manufacture ‘Haemaccel’ at Baddi, directing the 26 employees who are only the packing staff, helpers, sweepers etc. to report for duty at Baddi is wholly unjustified and therefore, pending the hearing and final disposal of the Complaint, the transfer of all the employees be stayed. 18. Relying upon a decision of this Court in the case of Brihanmumbai Union of Journalists V/s. Brihanmumbai Union of Journalists V/s. Brihanmumbai Union of Journalists V/s. Nav Bharat Press Nav Bharat Press Nav Bharat Press Limited reported in 2002 II CLR 67 2002 II CLR 67 2002 II CLR 67, Mr.Shaikh submitted that the alleged shifting of the Unit and transferring the 26 employees from Mulund to Baddi without any justification is colourable exercise of power and such an action ought not to have been permitted to be implemented. - = : 14 : = - 19. Relying upon the decisions of the Apex Court in the case of Workmen V/s. Associated Rubber Workmen V/s. Associated Rubber Workmen V/s. Associated Rubber Industry Limited Industry Limited Industry Limited reported in 1986 I CLR 284, B. 1986 I CLR 284, B. 1986 I CLR 284, B. Varadha Rao V/s. State of Karnataka Varadha Rao V/s. State of Karnataka Varadha Rao V/s. State of Karnataka reported in (1984) 4 SCC 131, State of M.P. V/s. Shankarlal (1984) 4 SCC 131, State of M.P. V/s. Shankarlal (1984) 4 SCC 131, State of M.P. V/s. Shankarlal reported in AIR 1980 SC 643 AIR 1980 SC 643 AIR 1980 SC 643, Mr.Shaikh submitted that unwarranted and unreasonable transfer from Mulund in Mumbai to Baddi in H.P. is bound to cause irreparable harm to the employees as it disrupts the education of their children and lead to numerous other complications and problems and results in hardship and demoralisation and therefore, the Company should not have abruptly closed the unit and transferred the employees to a new establishment. He submitted that since the complaint can be decided in a time bound manner, it is just and proper that the transfer order be stayed and the employees be paid wages subject to the final decision in the Complaint and subject to adjustment of the said wages from the gratuity amount etc. payable to the employees. Mr.Shaikh lastly submitted that the employees would go to Baddi if the services of these employees who are packing staff, helpers, sweepers etc. is absolutely necessary and the Company takes effective steps to ameliorate their hardships by way of monetary benefits and till then the transfers be - = : 15 : = - stayed. 20. Mr.Cama, learned Senior Advocate appearing on behalf of the Company on the other hand submitted that the Industrial Court having held that the transfer was prima facie in accordance with law could not have directed that pending the complaint, 7 out of the 26 employees be absorbed in the other establishments of the Company. Mr.Cama fairly stated that as regards the employee who is due to retire in the first week of July 2008, he is not pressing the case. However, as regards the other 6 employees, he submitted that the Industrial Court committed an error in directing the Company to absorb them in other establishments of the Company in the Mumbai / Thane region, in spite of the clear stand taken by the Company that no vacancies exist in those establishments. 21. Mr.Cama submitted that the direction of the Industrial Court to accommodate / absorb some of the employees in other establishments of the Company at Mumbai / Thane region is based on inferences and not warranted by facts and such a presumption is not permitted in law. He submitted that having held that the personal difficulties and hardships are no grounds for staying the transfer, the Industrial - = : 16 : = - Court could not have stayed transfer of some of the employees. The fact that the three lady employees had put in more than 35 years of service and the fact that three other employees were suffering from heart ailment could not be a ground to stay the transfer. The impugned order in so far as it pertains to directing the Company to absorb the employees in other establishments in the Mumbai / Thane region without any cogent reasons and exceptional circumstances, cannot be sustained. 22. Dealing with the case of 19 employees who were denied interim relief by the Industrial Court, Mr.Cama submitted that in their appointment letter, it was specifically stated that their services are liable to be transferred to any other inter department or inter establishment of the Company. Therefore, the Company was within its rights to transfer the employees. The fact that in the appointment letter issued to the technical staff employed in the year 2000 the Company had stated that their services liable to be transferred to any establishment which may be set up, established or acquired at any time in future, it cannot be inferred that these 26 employees were not liable to be transferred to Baddi. The submission is that what was implicit in the existing transfer clause - = : 17 : = - was made explicit in the transfer clause contained in the appointment letters issued to the technical staff in the year 2000. Therefore, there is no merit in the contention that the Company could not have transferred these employees. 23. Mr.Cama further submitted that the decision to shift the Mulund Unit to Baddi in H.P. was a commercial decision taken by the Company due to business exigencies. After taking decision to shift the Unit, the Company could have terminated the services of these employees, however, with a view to maintain industrial harmony, the Company has decided to transfer the services of all the permanent employees on the same terms and conditions to the shifted place. Moreover, the Company has agreed to bear the reasonable travelling expenses of the employees and has also made temporary arrangements for their stay at Baddi till, they find suitable accommodation. In these circumstances, the decision of the Industrial Court in declining to stay the transfer cannot be faulted. 24. Mr.Cama further submitted that in the proceedings relating to the transfer of the employees from Deonar Unit to Mulund unit, the Union leaders as well as the employees had specifically - = : 18 : = - expressed their willingness to work in any of the establishments of the Company including the Unit at Madhya Pradesh. Therefore, it is not open to the employees to blow hot and cold and contended that the service conditions do not permit the Company to transfer the employees to Baddi. 25. Mr.Cama further submitted that 100% of the Plant & Machinery from the Mulund Unit has already been shifted to Baddi, however, the Company is unable to obtain the licence, because, as per rule 79 framed under the Drugs & Cosmetics Act, 1940 when the concerned officer visits the Unit for the purpose of granting licence, it is necessary that the requisite staff is present. Therefore, it is essential that these employees must report for duty at Baddi immediately. 26. Relying upon a Division Bench decision of this Court in the case of Biddle Sawyer Limited V/s. Biddle Sawyer Limited V/s. Biddle Sawyer Limited V/s. Chemical Employees Union Chemical Employees Union Chemical Employees Union reported in 2007 III LLJ 2007 III LLJ 2007 III LLJ