Replacement of contractual workmen without justification is not bona fide action: High Court of Delhi

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 10TH DAY OF FEBRUARY 2021 THE HON’BLE MR. JUSTICE ALOK ARADHE THE HON’BLE MR.JUSTICE NATARAJ RANGASWAMY W.A. NO.16925 OF 20111. WORKMEN OF MYSORE LAMP WORKS LTD REPRESENTED BY THE MYSORE LAMP STAFF & EMPLOYEES UNIONA REGISTERED TRADE UNION REGISTERED UNDER THE INDIAN TRADE UNIONS ACT) REP. BY ITS PRESIDENT HAVING ITS OFFICE AT OLD TUMKUR ROAD MALLESHWARAM WEST BANGALORE 560055. THE MYSORE LAMP WORKS LIMITED APPELLANT 2 REP. BY THE MANAGING DIRECTOR OLD TUMKUR ROAD MALLESHWARAM WEST BANGALORE 560055. BY SRI. K. SUBBA RAO SR. COUNSEL FOR M S. SUBBA RAO & CO. FOR R1 SRI. UDAYA HOLLA SR. COUNSEL FOR SMT. ANUPARNA BORDOLOI ADV. FOR R2) RESPONDENTS THIS W.A. IS FILED U S 4 OF THE KARNATAKA HIGH COURT ACT PRAYING TO SET ASIDE THE ORDER PASSED IN THE WRIT PETITION NOS.3190 2002 C W W.P. NOS.8259 2002 37142 2002 AND 757 2003 DATE THIS W.A. HAVING BEEN HEARD AND RESERVED ON 08.02.2021 FOR HEARING AND COMING ON FOR PRONOUNCEMENT OF JUDGMENT THIS DAY ALOK ARADHE J. DELIVERED THE FOLLOWING: This intra court appeal under Section 4 of the Karnataka High Court Act 1961 has been filed by the Government of Karnataka being aggrieved by the order dated 14.01.2011 passed by learned Single Judge in W.P.No.3190 2002 and other connected matters by which learned Single Judge has quashed the orders 3 dated 04.01.2002 as well as 30.08.2002 by which Mysore Lamp Works Ltd.by which operation of the company was closed by the State Government and subsequently an order was passed by the Labour Department under Section 25 O of the Industrial Disputes Act 1947 hereinafter referred to as the Act for short) granting permission to close the company under Section 25 O(2) read with Section 25 O(8) of the Act. Brief facts necessary for adjudication of this appeal are that the company is a public sector undertaking. In the year 1992 93 the company was operating on profitable basis. However since 1993 94 the company started incurring losses. On 11.07.1996 the State Government decided to prioritize the company. The company in the month of December 1996 was registered with Board of Industries and Financial Reconstruction granting permission to close the company under Section 25 O(2) read with Section 25 O(8) of the Act. The aforesaid orders were subject matter of challenge before the learned Single Judge. The learned Single Judge vide order dated 14.01.2011 5 allowed the writ petitions and the matter was remitted to the Government for fresh consideration of the application under Section 25 O of the Act after affording reasonable opportunity to the workmen of the company to put forth their case and thereafter to consider the case of the workmen in the light of observations made in the order. In the aforesaid factual background this appeal has been filed. 3. During the pendency of this appeal a bench of this court vide order dated 08.12.2016 passed in O.S.A.No.36 2014 in view of consensus arrived at between the parties directed the Additional Chief Secretary to the Government Commerce and Industries Department to ensure that the M s Mysore Minerals Ltd. shall convene a meeting of Board Of Directors as per decision dated 07.12.2006 for the absorption of the workmen within two weeks and further directed to identify the places where the services of the workmen of the company are to be absorbed in M s Mysore Minerals 6 Ltd. and the details shall be produced on the next date of hearing. It was further directed that each of the workmen shall be paid a sum of Rs.1 25 000 subject to proper identification. Admittedly in pursuance of the order passed by a bench of this court a sum of Rs.1 25 000 has been paid to the workmen who had filed the writ petition. Thereafter by an order dated 13.11.2020 a bench of this court directed Karnataka Minerals to make adhoc payment of Rs.15 000 per month to the workmen for past three years within a period of four weeks from the date of passing of the order. However the aforesaid payment was made subject to result of the appeal and the orders that may be passed on the merger by the appropriate government and also subject to future adjustment that can be made. Learned Senior counsel for the workmen of the company submitted that pursuant to the order 7 passed by State Government on 01.12.2020 the company had filed a memo dated 02.01.2021 along with which the report of the Task Force which was constituted to arrive at appropriate notional pay fixation and arrears of the workmen of the company was placed on record. It is further pointed out that the aforesaid Task Force has made the recommendations in favour of the workmen which are yet to be implemented. 6. However it is contended that the aforesaid Committee has not taken into account the fact that the workmen are entitled to back wages for a period from 2003 till the date of their absorption i.e. in the year 2017. It is further submitted that the Committee has not taken into account the past services rendered by the workmen in the company and the issue with regard to fitment pay scale and promotion and seniority as well as consequential benefits. In this connection our attention has been invited to statement of revised wages from 1994 to 2019 as per the settlement between the 8 Management and the Workers Union in respect of Mysore Electrical Industries Karnataka Soaps and Detergents Ltd. It is submitted that the workmen who are approximately 55 in number are also entitled to parity in treatment and are entitled to arrears of wages as well as consequential benefits at par with Mysore Electrical Industries Karnataka Soaps and Detergents Ltd. In support of aforesaid submissions reliance has been placed on decision of the Supreme Court in B.K.MOHAPATRA VS. STATE OF ORISSA AND ANOTHER 1987 SCC 553 S.M.PANDIT AND OTHERS VS. STATE OF GUJARAT AND OTHERS 4 SCC 778 and in HARJINDER SINGH VS. PUNJAB STATE WAREHOUSING CORPORATION 3 SCC 192. Learned Senior counsel has also reminded us of our constitutional obligation while reading out paragraphs from the HARJINDER SINGH VS. PUNJAB STATE WAREHOUSING CORPORATION supra. 9 7. On the other hand learned Additional Advocate General submitted that notwithstanding the order passed by the State Government on 01.12.2020 still the validity of the order passed by the learned Single Judge needs to be adjudicated to ascertain the date of closure of the company. It is also contended that provisions of Section 25 O does not contemplate recording of evidence and in the instant case neither the workmen had adduced any evidence in its case nor had sought for an opportunity to cross examine the witnesses. Therefore the learned Single Judge erred in law in setting aside the order of closure on the ground that the workmen were not afforded an opportunity of cross examination. In support of aforesaid submissions reliance has been placed on decision of Bombay High BRITANNIA INDUSTRIES LTD. VS. MAHARASHTRA GNERAL KAMGAR UNION AND ANOTHER 3 LLJ 275. However learned Additional Advocate General fairly submitted that the 10 recommendations made by Task Force Committee shall be given effect to within a period of three months and the amount due to the workmen approximately to the tune of Rs.6 Crores who are before this court shall be paid to them within a period of three months. Learned Senior Counsel for the company submitted that the company had already announced VRS scheme on 31.12.2001 prior to 04.01.2002 and 1046 employees had already opted for the scheme and the company had closed its production on October 2002 itself. It is also pointed out that services of 48 employees have already been absorbed in Boards and Corporations where they were deputed by the company and services of 79 employees have been absorbed in Karnataka Mineral Corporation Ltd. Therefore in the fact situation of the case the Government rightly took a decision to close the company. It is also submitted that the learned Single Judge erred in setting aside the order 11 dated 04.01.2002 and in remitting the matter to the State Government for fresh consideration. Learned Senior counsel for the Karnataka Mineral Corporation Ltd. has invited our attention to paragraph 16 of the constitution bench decision of the Supreme Court ANAKAPALLE CO OPERATIVE AGRICULTURAL AND INDUTRIES SOCIETY LTD VS. WORKMEN AND OTHERS AIR 1963 SC 1489 and submitted that the constitution bench of the Supreme Court has laid down the principles with regard to retrenchment with regard to Section 25 FF of the Act and the workmen are either entitled to compensation or absorption and they cannot claim both the reliefs. However it is submitted that the Corporation shall implement the recommendation of the Task Force Committee within a period of three months and shall grant the benefits to the workmen due under the recommendations within a period of three months from 12 10. We have considered the submissions made by learned counsel for the parties and have perused the record. It is well settled in law that this court while passing the order may take into account the subsequent events. In this connection reference may be made to decision of the Supreme Court in ANDHRA BANK VS. OFFICIAL LIQUIDATOR AND ANOTHER 5 SCC 75. However it is well equally well settled proposition in law that the court should not answer the academic or hypothetical question. 1 SCC 147]. Now we may advert to the subsequent developments which have taken place the pendency of this appeal. The State Government during the pendency of this writ appeal took a conscious decision by an order dated 01.12.2020 which reads as under: 13 GOVERNMENT ORDER NO:CI 108 CMI 2020BENGALURU DATED 01.12.2020 In the circumstances explained in the preamble Government is pleased to accord approval for utilization of land assets of M s Mysore Lamp Works Ltd. for Experience Bengaluru Project as below: i) To develop Experience Bengaluru Project on the land assets of MLQWL as a novel concept showcasing both the culture of Karnataka but also maintaining lung space in the heart of the city as per the National Green Tribunal Act. ii) Withdrawal of Government Order dated 20.03.2020 according approval the Scheme of Amalgamation of the Mysore Lamp Works Limited with Karnataka State Minerals Corporation Limited and empowering Mysore Lamp Works Limited to implement Experience Bengaluru Project by making necessary changes the Memorandum of Association and Article of iii) BDA to consider for change of land use from industrial to public and semi public of MLWL land to suit the proposed Experience Bengaluru Project. iv) In principal approval to initiate process of buy out minority shareholders of 5.6% and settle liabilities and make the MLWL to 100% Government Shareholding The above approval is accorded subject to the following terms and conditions 1) A detailed valuation of the company is to be done after the change in nature of the company and after the change in nature of ht eland. The value of each share is then assessed and shared with GoK. b) The liability with respect to employees will continue to be the responsibility of the KSMCL as decided in the previous amalgamation order. c) MLWL board decision is taken as mandated by the companies act wherever necessary. d) Hon ble High Court is briefed of the new developments before hand since a case is still pending in the court with respect to employees issue. e) Since majority of the employees are already absorbed in KSMCL they will continue to work there and employees issues with respect to fitment payment of arrears etc will be handled by KSMCL. 14 f) On the liabilities since MLW will continue to be in existence the liabilities need not be retired as of now. A decision on this can be taken at a later date. This order is issued with the concurrence of Finance Dept. vide its Note No. FD 320 Exp 1 2020 dated 25.11.2020 Commerce and Industries Departmentvide File No. CI 108 CMI 2020(E) dated 26.11.2020 & Urban Development Department vide File No .CI 108 CMI 2020 (E) and Cabinet approval in its meeting held on 27.11.2020 vide subject No.C:612 2020. By Order and in the name of the Governor of Karnataka Sd Under SecretaryCommerce & Industries Department. 11. Thus from perusal of the aforesaid Government Order it is evident that the Government has taken a conscious decision to approve for utilization of the land assets of the company for experience Bengaluru Project and has withdrawn the Government Order dated 20.03.2020 according approval to the scheme of amalgamation of Company with Karnataka State Minerals Corporation Limited and empowering the company to implement experience Bengaluru Project by making necessary changes in its Memorandum of Association and Articles of Association. In Principal 15 approval has also been accorded to initiate the process of buy out minority shareholders of 5.6% and settle liabilities and make the company to a 100% government share holding company and the aforesaid decisions have been taken subject to the terms and conditions which have been mentioned in the order. 12. Thus it is axiomatic that the company is still in existence therefore in view of the subsequent development viz. the conscious decision taken by the State Government it is not necessary for us to adjudicate the validity of the order passed by the learned Single Judge as the issue with regard to validity of the order of closure has been rendered academic as the State Government has subsequently taken a conscious decision to permit the company to be in existence and has converted the same as 100% Government Company. It is relevant to mention here that pursuant to interim order dated 08.12.2016 passed by a bench of this court directing absorption of the 16 employees of the company the State Government had constituted the special task force committee. The committee has made a representation in favour of the workmen which is reproduced below for the facility of i) The Task Force is of the unanimous view that the pay scales fixed by KSMCL AND MLWL employees on absorption is better than the notional pay worked out with MLWL pay scales. Hence the fixed by KSMCL on absorption of MLWL employees is appropriate and reasonable. ii) Monetary relief may be provided to MLWL employees from 12.06.2003 to the date of absorption in KSMCL or the date of death or the date of superannuation as per the Scheme of Financial Relief already approved vide Government Order No.CI 14 CMC 2019 dated 20.03.2020 and Government Order No.CI 108 CMI 2020(E) dated 1.12.2020. 17 iii) The above may be submitted before the Hon ble Court by MLWL AND KSMCL through their senior counsels. 13. Learned Additional Advocate General as well learned Senior counsel for Karnataka Mineral Ltd. have recommendations made by the Task Force Committee shall be given effect to within three months. The aforesaid statement is placed on record. It is not in dispute that services of the workmen who are before us have been absorbed in the year 2017 in Karnataka Mineral Corporation Ltd. and they are in service and in the peculiar facts of the case bearing in mind the interest of the workmen as well who have been litigating before this court for past approximately two decades we deem it appropriate to mould the relief and to direct the State Government as well as Karnataka Mineral Corporation Ltd. to ensure that the benefits of the recommendation made by the Task Force Committee are 18 given effect to and the payment of amount of approximately Rs.6 Crores as stated by Additional Advocate General shall be paid to the workmen within a period of three months from today who are before us in the light of recommendations made by the Task Force Committee subject to proper identification. However we may hasten to add that we have not quantified the amount due to the workmen. 14. This court is conscious of its constitutional obligation it is trite law that case is an authority for what it decides and not for what logically follows from it. The ratio decidendi of the case has to be read in the factual context. It is pertinent to note that in none of the cases relied upon by the learned Senior counsel for the workmen the Supreme Court was dealing with the matter arising out of an order of winding up or closure of a company. Therefore the decisions relied upon by the learned Senior counsel for the workmen have no application to the fact situation of the case. The court 19 while deciding a controversy has to bear in mind the scope of the proceeding as well and jurisdiction of this court in this appeal is confined to examining the validity of the order passed by the learned Single Judge and this court is not oblivious of its constitutional obligations which can only be discharged in an appropriate proceeding. 15. The grievance of the workmen with regard to their fitment fixation of pay scales and grant of consequential benefits cannot be gone into in this appeal as the same requires adjudication of the facts which can be done in an appropriate forum. Apart from this the aforesaid adjudication would be outside the scope of the present proceeding therefore we refrain ourselves from entering into the arena of disputed questions of fact which can only be adjudicated in an appropriate forum. Therefore the workmen would be at liberty to take recourse to such remedy which may be available to them in accordance with law. All questions in this regard 20 are kept open to be adjudicated in an appropriate forum. It is trite law that life of an interim order is co terminus with the main proceeding therefore the interim orders dated 08.12.2016 as well as 20.02.2020 do not survive in view of the fact that order dated 08.12.2016 has already been implemented and controversy in this appeal has already been adjudicated. With the aforesaid directions the appeal disposed of. Sd Sd 

Summary: When the contractual employees are terminated and replaced by other workers without any justification, it is not a bona fide action by the employer This was held in the case of Naveen Kumar And Ors.V.Employees State Insurance Corporation {W.P.(C) 3956/2020 &amp; CM APPLs. 14200/2020, 14201/2020] by Hon’ble Judge Pratibha M.Singh in the High court of Delhi. The present writ petitions have been filed by various Petitioners/Workmen who were working in the Employees’ State Insurance Hospital run by Employees’ State Insurance Corporation. These three writ petitions cover a total of 86 Workmen, who worked as Safai Karamcharis at the ESI Hospital. They were engaged by Uttar Pradesh Rajkiya Nirman Nigam. The case of the Workmen, is that the contract of maintenance of ESI Hospital was awarded by Respondent to the old Contractor, under the supervision of UPRNN, since August 2019. The Workmen were told that the contract was supposed to replace Respondent as the new contractor. The Workmen, thereafter, approached the supervisor of the new Contractor, requesting to continue services in the ESI Hospital. The allegation of the Workmen is that the new Contractor told them that if they wish to continue their services in the ESI Hospital, with the new Contractor, they would have to pay a sum of Rs.13,000/- each, which was their monthly salary, to the supervisor of the new Contractor. The counsel appearing for the Workmen, submits that the legal position on the questions that have arisen in these writ petitions is well settled. She submits that no contractual employee can be replaced by another contractual employee, in accordance with the judgment of the Hon’ble Supreme Court in State of Haryana and ors. v. Piara Singh [(1992) 4 SCC 118]. She further submits that until and unless there is a specific allegation of misconduct against any particular Workman, they cannot be removed from service and an en masse sacking of all the contractual Workmen is completely illegal. On the other hand, the counsel appearing for the respondent submits that there is no allegation of misconduct against any of the Workmen. He firstly relies upon the judgment of the learned Single Judge of this court in PTI Employees v. Press Trust of India and Anr. (2020) SCC Online Del 1216, decided on to argue that the usual remedy that has to be availed of by any Workman, in such circumstances, would be the statutory remedy under the Industrial Disputes Act, 1947. The same judgment to submit that the entire law on this subject has been recently crystallized by a ld. Single Judge of this Court, and that unless and until exceptional circumstances exist, the Court ought not to entertain such writ petitions. The court decided that two issues are posed in this case: (1) Whether the present writ petition is maintainable, or whether the Workmen ought to be relegated to avail of the alternate remedy available under the ID Act? 2) Whether contractual workmen being replaced, due to change in the Contractor with new contractual workmen is illegal and contrary to law? The court held that the jurisdiction of this court, under Article 226 of the Constitution of India, is not ousted, even though there may be an alternative remedy which is available. However, the same is to be exercised sparingly. The general rule is to relegate the parties to avail of the alternate remedy.