Case: Ceat Ltd Vs. Anand Abasaheb Hawaldar

2. The controversy involved in the present appeal arises in the following background:By Circular dated 30th June, 1992 the appellant - a public limited company incorporated under the Companies Act, 1956 declared a Voluntary Retirement Scheme (hereinafter referred to as the VRS-I) for its employees which was accepted by the 337 employees. On 16th March, 1994 the appellant entered into a Memorandum of Understanding with the employees Union containing another Voluntary Retirement Scheme (hereinafter referred to as the VRS-II). The same was accepted by 179 employees. Respondents 1 to 6 who had earlier accepted VRS-I filed a complaint before the Industrial Court, Thane on 20th July, 1994 alleging that the appellant-company had committed an unfair labour practice in terms of item nos.5, 9 and 10 of Schedule IV of the Maharashtra Recognition of Trade Unions & Prevention of Unfair Labour Practices Act, 1971 (in short the Act). It was contended that one of the benefits which was given to the employees who had accepted VRS-II, namely payment of a sum of Rs. 90,000/- ex-gratia, had not been extended to the complainants who had retired pursuant to VRS-I in 1992. This according to them was illegal, unlawful and amounted to unfair labour practice. The Industrial Court after considering the materials placed before it came to hold that the grievances of the complainants were well founded. Accordingly, by award dated 24.10.1996, it directed the appellant to pay Rs.90,000/- to each of the employees who had retired under VRS-I, as similar sum had been paid to 179 employees who had accepted VRS-II in 1994. The order passed by the Industrial Court was challenged by the appellant by filing a writ petition in the Bombay High Court. A learned Single Judge dismissed the writ petition by judgment dated 11.7.2001. In fact the learned Single Judge, modified the award by granting additionally, interest at 6% P.A. from 15.4.1994 till date of payment. A Letters Patent Appeal was filed before the Division Bench which was also dismissed by the impugned judgment dated 12/13-6-20033. It is to be noted that before the High Court the following grievances were made by the employer:-(i) A complaint of unfair labour practice could be filed only by a recognized union and not by an individual workman or some of them. Therefore, in a complaint filed by 6 employees, relief could not be granted to 337 employees(ii) In order to sustain the grievance under Item (5) of Schedule IV to the Act, something more than mere differential treatment was necessary to be established. It was incumbent upon the claimants to show that there was any favouritism or partiality shown to one set of workers regardless of merits(iii) In order to sustain the grievance under Item (9) of Schedule IV to the Act, it was to be established that there was failure to implement any award, settlement, agreement, and(iv) In order to sustain the grievance under Item (10) of Schedule IV to the Act, it was to be established that the employer had indulged in act of force or violence4. The High Court found that the plea regarding maintainability of the complaint by individual workman was not correct. Further it held that in view of the clear statement in the letter dated 11.7.1992 made by Sri P. Krishnamurthy, Vice-President of the Company, there was an assurance that all the employees who would accept the VRS-I would be entitled to all benefits which would be given to other employees and that those who would not accept VRS-I would not be paid anything more. Therefore, the High Court held that the fact that Rs.90,000/- was paid to those who accepted VRS-II clearly indicated discrimination. Accordingly, the orders of the Tribunal and learned Single Judge were confirmed by the Division Bench

Court's reasoning:
9. The factual background which is virtually undisputed is that the appellant-company took over Murphy India Ltd. (hereinafter referred to as the Murphy). Murphy had merged with the appellant-company pursuant to the order of Board of Industrial & Financial Reconstruction (in short BIFR). Due to recession in the consumer electronic industry, the undertaking became unviable. Before the VRS I and II the appellant-company had introduced VRS Schemes in October, 1983 and February, 1988. All the employees who were covered by the VRS I and II were ex-Murphy employees11. In Item (5) of Schedule IV to the Act, the Legislature has consciously used the words favouritism or partiality to one set of workers and not differential treatment. Thus, the mental element of bias was necessary to be established by cogent evidence. No evidence in that regard was led. On the contrary the approach of the Industrial Court and the High Court was different. One proceeded on the basis of breach of assurance and the other on the ground of discrimination. There was no evidence brought on as regards the pre-requisite i.e. favouritism or partiality. Favouritism means showing favour in the matter of selection on circumstances other than merit12. It is not every kind of differential treatment which in law is taken to vitiate an act. It must be a prejudice which is not founded on reason, and actuated by self-interest - whether pecuniary or personal. Because of this element of personal interest, bias is also seen as an extension of the principles of natural justice that no man should be a judge in his own cause. Being a state of mind, a bias is sometimes impossible to determine. Therefore, the courts have evolved the principle that it is sufficient for a litigant to successfully impugn an action by establishing a reasonable possibility of bias or proving circumstances from which the operation of influences affecting a fair assessment of the merits of the case can be inferred. As we have noted, every preference does not vitiate an action. If it is rational and unaccompanied by considerations of personal interest, pecuniary or otherwise, it would not vitiate a decision13. In order to bring in application of Item 9, it was submitted by the respondents that there was an agreement/assurance which was not implemented. It has been urged that a letter can also be construed as an agreement. But that logic is not applicable in all cases. It will depend upon the nature of the letter/communication. As a matter of fact, there is no dispute that there was no Memorandum of Understanding or agreement in writing. The letter of Vice- President on which the Industrial Court and the High Court have placed reliance does not anywhere indicate that even if the fact situation was different the same amount would be paid at all future times. Mere breach of assurance is not favouritism or partisan approach. It has to be definitely pleaded and proved to show that Item 9 of Schedule IV was attracted. As noted above, the Memorandum of Understanding in 1994 came to arrive at because some of the employees went to Court after not accepting VRS-I. The background facts do not establish that the appellant-company was guilty of favouritism or partiality. There is also no plea or proof that the employer indulged in any violence or force to coerce 337 employees to accept VRS-I. Therefore, the complaint of unfair labour practice is not established under Items 5, or 9 or 10 of Schedule IV to the Act