Case: Ceat Ltd Vs. Murphy India Employees Union

3. Murphy India Ltd. (Murphy) was a manufacturer of Radio and Television sets. Norwest Electronics Ltd. (for short, Norwest), which was running a servicing centre, was a sister concern of Murphy India Ltd. It had been carrying out maintenance and repair works of the products of Murphy at its Thane factory. It was an establishment within the meaning of the provisions of the Industrial Employment (Standing Orders) Act, 1946, (1946 Act ). The concerned workmen were on the rolls of Norwest. The Provident Fund and E.S.I.C. Code Number of both the companies were the same. Some workmen working in the said Norwest were its permanent employees. Murphy became a sick company. It was referred to the Board of Industrial and Financial Reconstruction (BIFR). Pursuant to a scheme made by it on or about 31.08.1990 Murphy merged with the appellant- company. It undertook the maintenance and repair works carried out at the factory of Murphy situated at Parel. Some of the workmen of Norwest, who were represented by the Union herein, had been assured that they would be provided with employment on permanent basis by the appellant herein. 45 workmen had applied for employment with its Electronics Division. They were issued fresh appointment letters with effect from 01.02.1991. They were initially appointed on temporary basis at Parel Unit of the appellant, wherein sales and service of the Radios and Televisions used to be carried out. Indisputably, the said establishment was registered under the Bombay Shops and Commercial Establishment Act, 1948 (for short, the 1948 Act)4. Although initially existence of the Certified Standing Orders was denied by the appellant, a copy thereof was produced before the High Court, in terms whereof, the employees appointed on probation were to get the permanent status on the expiry of six months from the date of joining the service; whereas in terms of the Model Standing Orders, such permanent status was to be conferred on the workmen on the expiry of three months of their being placed on probation6. On or about 29.04.1991, a Memorandum of Settlement was entered into between the Electronics Division of the appellant herein and the respondent Union, which was recognized in terms of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 (for short, the 1971 Act) for resolution of the disputes arising out a Charter of Demands made on 27.10.1989 in respect of the workmen working in the shop floor and office of the company situated at Thane and Parel7. On or about 06.10.1992, a complaint was filed by the respondent- Union about the violation of the terms of the said settlement, alleging unfair labour practices as contained in Item Nos. 1(a) and 4(g) of the Second Schedule and Item Nos.6 and 9 of the Fourth Schedule appended to the said Act. A prayer for payment of the same wages as are paid to the permanent workmen of the company as also a declaration that the said workmen had become the permanent workmen of the company from their respective dates of joining or with effect from 01.02.1991, was also made. The appellant denied and disputed that it had committed any unfair labour practice8. In view of the rival contentions raised before the Industrial Tribunal, the following issues were framed :"(i) Does the Complainant prove that they are permanent employees since joining Norwest Electronics Ltd. and/or Ceat Ltd. and they are entitled to full back wages and continuity of service w.e.f. 01.02.1991?(ii) Whether the Respondent has committed Unfair Labour Practice under Items 1(a), 4(a) of Schedule II and Item 3, 6 and 9 of Schedule IV of the MRTU & PULP Act?"9. Before the Industrial Court, reliance was placed by the respondent on the said settlement dated 29.04.199110. By reason of an award dated 29.03.2001, the Industrial Court held that the benefits under the said settlement must be held to have been rendered to the concerned workmen, in terms whereof they became entitled to the status of permanent workmen on the expiry of the period of probation of three months, and were, thus, also entitled to the other benefits envisaged thereunder . Monetary benefits were directed to be paid to the workmen with compound interest @ 12% p.a11. The legality or otherwise of the said award came to be questioned by the appellant by filing a writ petition before the Bombay High Court. The said writ petition has been dismissed by reason of the impugned judgment.

Court's reasoning:
Mr. Andhyarujina would submit that the rate of interest awarded by the High Court being 12% p.a. is on a high side. We, in the peculiar facts and circumstances of the case and having regard to the current rate of interest prevailing in the market, direct that the rate of interest would be 9% p.a