Case: M/S. Empire Industries Limited Vs. State of Maharashtra, Industries, Energy and Labour Department &amp; Others

2. The background facts, in nutshell, are as follows. The appellant is a public limited company incorporated under the provisions of the Companies Act, 1956. It has a factory at Ambarnath which was engaged in the business of manufacturing of E.O.T. Cranes. Respondent nos. 2 and 3 are the Unions of the workmen employed in the factory of theRespondent no.3 claim to be a recognised union. The dispute between the two unions is not relevant for deciding this letters patent appeal, since the issue that was raised before the learned Single Judge whether reference under section 10(1) of the I.D. Act made on the basis of the Charter of demands submitted by respondentis bad and consequently liable to be quashed and set aside, has not been pressed in the instant Appeal. It appears that various settlements were signed with respondentand the last such settlement was signed on 24.12.1986 which expired in June, 1989. A fresh Charter of demands was submitted by respondent no.3 on 27.7.1989 whereas respondent no.2 submitted their Charter of demands on 21.11.1991. The appellant could not meet with the demands as, according to them, they were incurring heavy losses and at the material time there were accumulated losses of Rs.11.05 crores. Various meetings took place between the representatives of the appellant and the office bearers of the recognised union, wherein they were explained by the appellant the circumstances under which their undertaking was not in a position to meet their demands. It was pointed out, according to the appellant, that unless the recognised union was agreeable for imposition of ceiling on D.A. allowance as also reduction in manpower, the factory would not be economically viable. Since the union and their workmen did not concede the appellants demand for imposition of ceiling on D.A. and reduction in manpower, the appellant issued a notice ofdated 28.9.1991. It may be noticed that even prior to issuance of the lockout notice, a notice of change under section 9A of the ID Act for fixing ceiling on D.A was given by the appellant on 27.11.1990. In pursuance of the lock out notice, the lock out was started on 14.10.1991. As mentioned earlier, respondentalso submitted its Charter of demands on 21.11.1991 claiming that majority of the workmen of the factory had become its members and that the appellant should negotiate and sign settlement with respondent no.2. Respondent no.1 issued two orders on 23.9.1992, the first being an order under section 10(1)(d) of the I.D. Act. By that order, the Charter of demands raised by respondent no.2 was referred for adjudication of the industrial dispute at Thane. In so far as the second order is concerned, it was issued under section 10(3) of the I.D. Act prohibiting the continuation of lock out at the said factory which was impugned in the writ petition. The reference made by respondent no.1 under section 10(1)(d) on 23.9.1992 and the reference dated 12.2.1992 made in pursuance of the Notice of change under section 9A of the I.D. Act for the purposes to impose ceiling on D.A., are still pending. The impugned order under section 10 (3) of the I.D. Act, however, was passed prohibiting continuation of lock out at the said factory.3. The learned Single Judge in paragraph 4 of the impugned order formulated the grounds of objections raised in the petition which read thus:(a) The reference at the instance of respondent no.2 could not have been made as it was not a recognised Union under the M.R.T.U.P.U.L.P. Act. The recognised Union was the 3rd respondent. The reference, therefore, is bad and consequently liable to be quashed and set aside.(b) The employer had disputes with the workmen in so far as (a) D.A. and (b) reduction in staff. There was only a reference to the Industrial Tribunal in so far as D.A., is concerned. There was no reference in so far as reduction of staff is concerned and consequently the order prohibiting the continuance of lockout was contrary to section 10(3) of the I.D. Act".As stated earlier, we are not dealing with the first ground since Mr K.K.Singhvi, learned senior counsel for the appellant, did not press that ground. While dealing with the second ground, the learned Single Judge in paragraph 8 of the Judgment rejected the submission of Mr Singhvi. The relevant observations in paragraph 8 of the impugned judgment reads thus:"... .... ...Sectioncomes into operation when an employer proposes to effect any change in the conditions of services applicable to any workman in respect of any matter specified in the Fourth Schedule. In other words in those situation when the IVth Schedule is attracted management has to follow the procedure set out under Sectionperusal of the IVth Schedule would indicate one such item being Item No.11 which reads asincrease or reduction (other than casual) in the number of persons employed or to be employed in any occupation or process or department or shift not occasioned by circumstances over which the employer has no control".Therefore, if the employer wanted to reduce or remove surplus workmen the I.D. Act itself provide the manner and mechanism by which that exercise could have been undertaken. In other words apart from following the procedural requirement there is no embargo on the employer to reduce the number of workmen. This is not therefore, a dispute which the employer was bound to raise with the workmen and to have it referred for adjudication at the instance of the Employer. On the contrary on adjudication cannot be borne out considering the scheme of the I.D. Act. In case of reduction of workmen if surplus, the Act itself provides a mechanism. Even in a case where there is likely retrenchment occasioned by rationalisation, standardisation or improvement of plant or technique the employer can so do by following the procedure laid down under section 9A. That being the case the judgment of the Apex Court in the case of Delhi Administration (supra) would be inapplicable considering the case in hand and it would be inapplicable in so far as the retrenchment/termination of the services of surplus workmen are concerned... ... ..."

Court's reasoning:
It is on the basis of this judgment it was submitted that the management had raised two demands/dispute, viz. ceiling on D.A. and reduction of surplus labour/manpower. Out of which the dispute in respect of ceiling on D.A. only was referred to and, therefore, respondent no.1 had no jurisdiction to pass prohibitory orders under section 10(3) of the I.D. Act against the lock out which was declared in respect of their specific demand/dispute for reduction of surplus labour. It was, therefore, submitted that in any case respondent no.1 could not have passed the order under section 10(3) in the reference made under section 10(1) in pursuance of the charter of demands of the9A clearly provides that no employer, who proposes to effect any change in conditions of service applicable to any workman in respect of any matter specified in the Fourth Schedule, shall effect such change, without giving a notice to the workmen who are likely to be affected by such change. Item 11 of the fourth Schedule provides any increases or reduction other than casual in the number of persons employed or to be employed in any occupation or process or department or shift, not occasioned by circumstances over which the employer has no control. The Apex Court in the case of L. Robert DSouza and Executive Engineer, Southern Railway and another, 1982 (I) LLJ 330 had an occasion to deal with the provisions contained in section 9A. In that case, it was observed that in order to attract Section 9A the employer must be desirous of effecting a change in conditions of service in respect of any matter specified in Fourth Schedule. If the change proposed does not cover any matter in Fourth Schedule section 9A is not attracted and in that case no notice is necessary. Similarly the Apex Court in Indian Oil Corporation Ltd case (supra) while dealing with Item No.11 of Schedule IV of the I.D. Act, observed that sudden withdrawal of the concession in the conditions of service would materially and adversely affect the workmen. A plain reading of section 9A of the I.D. Act would show in order to attract that section an employer must be desirous of effecting a change in conditions of service in respect of any matter specified in Fourth Schedule. In other words, if the change proposed does not cover any matter in Fourth schedule, section 9A is not attracted and in that case no notice would be necessary. Therefore, for the employer, who desires to reduce or remove surplus workmen, section 9A read with item No.11 in the Fourth Schedule clearly provides the machinery by which that exercise could be undertaken.8. At this stage we would also like to consider an alternative submission advanced by Ms.Gayatri Singh, learned counsel for respondent no.3union, that it was possible for the appellant to terminate the services of the workmen by following the procedure under section 25N of the I.D. Act since admittedly there were more than 100 workmen working in the company. It was not disputed that the company had more than 100 workmen at the relevant time. As a matter of fact, the workmen working at the relevant time were above 400. The provisions under section 25N for retrenchment and section 250 for closure in Chapterof the I.D. Act are mandatory as held by the Apex Court in Workmen of Meenakshi Mills Ltd. and ors Vs. Meenakshi Mills Ltd. and Anr., (1992) 3 SCC 336.   These provisions provide that in case of retrenchment the company has to make an application seeking retrenchment of a particular number of employees, giving details, seniority etc of the employees and the nature of their work and further justification for the said retrenchment. Notice of its application also requires to be given to the workmen. The appropriate authorities, after giving an opportunity of being heard and considering an evidence on record, is expected to pass order under section 25N. It was therefore, submitted that even if it is assumed in the facts of the present case, that the provisions of section 9A are not attracted, it was open for the appellant to resort to the remedy provided under section 25N of the I.D. Act for reduction of manpower and the company was not bound/obliged to raise the dispute by issuing notice of lock out.9. The employer cannot be encouraged to resort to an indirect method to defeat the very object and the scheme of the I.D. Act by allowing it to raise a dispute which, otherwise, could be dealt with by resorting to the mandatory provisions in the I.D. Act. By allowing the management to raise a dispute, such as reduction of manpower, which could be remedied by resorting to the provisions of the I.D. Act cannot be allowed to be raised by issuing a lock out notice and seek reference under section 10(1). If the employer is allowed to raise such dispute, it would not only defeat the object of the Act but it would render the provisions which are mandatory in nature meaningless. The I.D. Act provides the manner and the machinery by which an exercise of reduction of surplus workmen can be undertaken. As observed by the learned Single Judge and with which we respectfully agree that apart from following the procedural requirements, there is no embargo on the employer to reduce the number of workmen and, therefore, the demand of reduction of the manpower in the present case is not a dispute which the employer was obliged/bound to raise with the workmen and to have it referred for adjudication at the instance of the employer. The learned Single Judge has rightly rejected the contention advanced on behalf of the appellant that the issue of reduction of manpower also ought to have been referred for adjudication. As observed earlier, the scheme of I.D. Act provides sufficient machinery for reduction of workmen.10. In the present case, it cannot be overlooked that when a notice of change dated 27.8.1990 under section 9A was given by the appellant it was given only for fixing ceiling on D.A. and no reference whatsoever was made in the said notice to their demand of reduction of surplus labour. Respondent No.1 made reference vide their order dated 12.2.1992 in pursuance of the notice of change that was given under section 9A by the appellant for fixing ceiling on D.A, whereas the notice of lock out was given on 28.9.1991 and it was started on 14.10.1991. The reference under section 10(1) in pursuance of the charter of demands dated 21.11.1991 was made on 23.9.1992. The aforementioned dates clearly demonstrate that it was possible for the appellant to give notice of change under section 9A for reduction of surplus workmen also. There was no reason for the appellant to raise a dispute in respect of surplus workmen in the lock out notice. If the companies are allowed to raise dispute relating to reduction of man power, for which remedies in the scheme of the Act are clearly provided and which could be availed of by the employer without any difficulty, the very object of the Act would be defeated. The remedies available in law which are mandatory in nature, cannot be rendered meaningless. The appellant had ample powers under the provisions of the I.D. Act to reduce the number of workmen and it was not bound to raise a dispute with the workmen and to have it referred for adjudication at their instance. It is against this backdrop, in our opinion the judgment of the Apex Court in the case of Delhi Administration (supra) would be inapplicable. After having observed that the employer was not bound to raise the dispute relating to manpower what remains is only demand of reduction of D.A. In other words, the demand/dispute raised in respect of reduction of manpower could not have been referred under section 10(1) and, therefore, the order passed under section 10(3) of the I.D. Act cannot be faulted. We have, therefore, no hesitation in dismissing this letters patent appeal filed against the order of learned Single Judge upholding the order under section 10(3) by which the lock out declared and started by the employer was prohibited.