Supreme Court of India
M/S. DIVGI METAL WARES LTD.versusM/S. DIVGI METAL WARES EMPLOYEES ASSOCIATION & ANR.
- Citation
- 2024 INSC 237
- Decided
- 21 March 2024
- Disposal
- Disposed off
Holding
Standing orders must be read together with the appointment letters, and where the appointment terms permit transfer to any establishment, the transfers are lawful and not barred by the standing orders.
Summary
The case concerned transfers of workmen between the appellant's two factories in Pune and Sirsi, which were challenged by the trade union on the ground that the standing orders, as amended in 1999, did not permit such transfers. The High Court had held the amendment invalid and declared the transfers illegal, while also dismissing the employer's writ petition. The Supreme Court examined whether the standing orders, read together with the appointment letters, restrict the employer's power to transfer employees across establishments. Relying on the principle laid down in Cipla Ltd. v. Jayakumar R., the Court held that there is no conflict between the standing orders and the appointment terms, which expressly allow transfers to any department or establishment of the company. Consequently, the transfers were deemed lawful and the High Court's orders were set aside. The Court also noted that it did not address the broader issue of the certifying officer's power to modify standing orders, leaving it for future determination.
Issues considered
- Whether the standing orders, read in conjunction with the terms of appointment, restrain the transferability of employees across different establishments of the employer.
- Whether the 1999 amendment deleting certain words from Clause 20 of the certified standing orders was valid under the Industrial Employment (Standing Orders) Act, 1946.
Legislation cited
- Industrial Employment (Standing Orders) Act, 1946s. 10(3), s. 3, s. 6, s. 7
Subjects
Transfer of employeesStanding ordersConflict with standing ordersAppointment order read with standing orderAmendment to standing order
Judgment
[2024] 3 S.C.R. 959 : 2024 INSC 237
M/s. Divgi Metal Wares Ltd.
v.
M/s. Divgi Metal Wares Employees Association & Anr.
(Civil Appeal No(s). 2032/2011)
21 March 2024
[B.R. Gavai* and Sandeep Mehta, JJ.]
Issue for Consideration
Whether the Standing Orders read in conjunction with the terms
of the appointment order restrain the transferability of employees.
Headnotes
Industrial Employment (Standing Orders) Act, 1946 – Validity of
transfers of employees – Terms contained in standing orders
as opposed to terms of appointment – Reconcilable – Transfer
of employees were valid under the Standing Orders and the
terms of appointment. [Para 12-15]
Industrial Employment (Standing Orders) Act, 1946 –
Interpretation of terms of appointment and standing orders –
Both read in conjunction permitted transfers to any department
or establishment of the company – Nothing contained in the
standing orders can operate in derogation or to the prejudice
of the provisions as provided in the contract of service – No
conflict between the terms of appointment and standing
orders – Principles established in Cipla Ltd. v. Jayakumar R.
and Another, (1999) 1 SCC 300 examined – Squarely applicable
to the instant case. [Paras 11, 14]
Industrial Employment (Standing Orders) Act, 1946 – Larger
issue regarding the power of modification of the standing
order not considered in the instant appeal – To be adjudicated
in an appropriate proceeding – High Court erred by deciding
the petitions without discussing the reasoning adopted by the
Tribunal – Impugned order not sustainable – quashed and set
aside. [Paras 16, 24]
Held: The Supreme Court reiterated the principle that standing
orders should be read in conjunction with the employment contracts/
appointment orders to determine the scope of transferability of
employees – The Supreme Court also observed that the law laid
down in Cipla Ltd. vs Jayakumar R. and Another (1999) 1 SCC
* Author
960 [2024] 3 S.C.R.
Digital Supreme Court Reports
300 was squarely applicable to the present case – Transfers of
employees were held to be lawful – The appeals were accordingly
disposed of. [Paras 12-25]
Case Law Cited
Cipla Ltd. v. Jayakumar R. and Another, (1999) 1 SCC
300 – relied on.
List of Acts
Industrial Employment (Standing Orders) Act, 1946
List of Keywords
Transfer of employees/workmen; Standing orders; Conflict with the
standing orders; Appointment order read with the Standing Order;
Amendment to the standing order.
Case Arising From
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2032 of 2011
From the Judgment and Order dated 02.02.2009 of the High Court of
Karnataka Bench at Dharwad in WA No.877 of 2006 (L)
With
Civil Appeal Nos.2035 and 2033 of 2011
Appearances for Parties
C. U. Singh, Sr. Adv., Nitin S. Tambwekar, Prasant B Bhat, Seshatalpa
Sai Bandaru, K. Rajeev, Advs. for the Appellant.
S. G. Hasnen, Sr. Adv., Varinder Kumar Sharma, Shantanu Sharma,
Ms. Deeksha Gaur, Advs. for the Respondents.
Judgment / Order of the Supreme Court
Judgment
B.R. Gavai, J.
1. These appeals challenge the judgment and order passed by the
Division Bench of the High Court of Karnataka, Circuit Bench at
Dharwad dated 02.02.2009, vide which the appeal filed by the M/s.
Divgi Metal Wares Employees Association, which is respondent No.1
herein, came to be allowed. Similarly, by the said order, the Writ
[2024] 3 S.C.R. 961
M/s. Divgi Metal Wares Ltd. v.
M/s. Divgi Metal Wares Employees Association & Anr.
Petition No.31808/2003 filed by Respondent No.1 was also allowed
and the Writ Petition No.7993/2006 filed by M/s Divgi Metal Wares
Ltd., the appellant herein, came to be dismissed.
2. The facts leading to the filing of the present appeals are as under:-
2.1 The appellant is a company which manufactures automobile
gears at two factories, one in Pune, Maharashtra and the other
at Sirsi, Karnataka. The Respondent No.1 is a Trade Union
registered under the provisions of the Indian Trade Unions Act,
1926. The relations between the appellant and the respondents
are governed by the Industrial Employment (Standing Orders)
Act, 1946 (for short, ‘the said Act’). It is also not in dispute
that, it was at the instance of the employer that the Deputy
Labour Commissioner and Certifying Officer passed an order
on 03.07.1989 thereby certifying the Standing Order. Clause
20 of the Standing Orders reads thus:-
“20. Transfers: An employee shall be liable to be
transferred at any time from the unit/factory/office/
establishment of the company located anywhere
in India or from one department to another within
the same unit/factory/office/establishment or from
one job of similar nature and capacity to another
job of same nature and capacity from one job to
another similar job or from one shift to another
shift, provided such a transfer does not affect his
normal wages. Any refusal to accept a transfer as
above will be treated as mis-conduct as per Rule
31.2.1949.”
2.2 It will also be relevant to refer to Clause 31 of the Certified
Standing Order. It reads thus:
“Nothing contained in these standing Orders shall
operate in derogation of any law for the time being in
force or to the prejudice of any right under a contract of
service, custom or usage, or an agreement settlement
or award applicable to the establishment.”
2.3 It is also not in dispute that Clause 5 of every letter of appointment
and Clause 1 of every letter of confirmation in service issued
to the workmen contains the following stipulation:-
962 [2024] 3 S.C.R.
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“Your services are transferable at short notice to
any department or any works, offices belonging to
the Company. In the event of transfer the terms and
conditions stipulated in this letter shall continue to
apply, and you will be governed by the rules and
regulations of the establishment where your services
are transferred.”
2.4 The appeal challenging the Certified Standing Order dated
03.07.1989 came to be filed before the learned Industrial
Tribunal which rejected the appeal as time barred vide order
dated 06.04.1996. Indisputably, the same order has not been
carried forward.
2.5 In the months of April to September, 1998 on account of reduction
in orders and lack of sufficient work, 66 workmen from the Sirsi
Factory were transferred to Pune Factory. All the workmen were
paid in advance for one week’s leave with pay @ Rs.1,000/-
towards travel expenses. Though the employees collected the
said amount, they did not report at the Pune Factory.
2.6 These workmen, whose services were transferred raised
Industrial Disputes vide Nos.42/1998, 2/1999 and 3/1999.
2.7 On the application of the respondent, the Deputy Labour
Commissioner and Certifying Officer modified the Certified
Standing Orders and deleted the following words from Clause
1 on 30.09.1999:-
“from the unit/factory/office/establishment in which he is
working to any other unit/factory /office/establishment
of the Company located anywhere in India, or”
2.8 The said deletion came to be challenged by way of an appeal
by the appellant before the learned Industrial Tribunal. The
learned Industrial Tribunal by the judgment and order dated
03.03.2001 partly allowed the appeal and set aside the
modifications to the Standing Order of 3rd July, 1989. The
same came to be challenged by the respondent by way of Writ
Petition No.44810/2001.
2.9 In the meanwhile, the learned Industrial Tribunal, Hubli vide its
common award, rejected the aforesaid three references, viz.,
[2024] 3 S.C.R. 963
M/s. Divgi Metal Wares Ltd. v.
M/s. Divgi Metal Wares Employees Association & Anr.
ID Nos. 2/1999, 3/1999 and 42/1998 filed by the workmen on
30.05.2002. The Tribunal also held that the transfers were not
malafide. A Writ Petition No.31808/2003 was filed before the
High Court by the respondents challenging the said award
dated 30.05.2002.
2.10 In parallel proceedings, 03 workmen who were similarly
transferred on 08.02.1999 raised Reference ID no.220/2001 and
16 workmen who had been earlier transferred on 27.04.1998
raised the Reference ID No.9/2002.
2.11 These references were allowed by the learned Industrial Tribunal
at Hubli vide award dated 28.02.2006 leading to filing of Writ
Petition No.7993/2006 by the present appellant before the
learned Single Judge of the Karnataka High Court.
2.12 In the meanwhile, the learned Single Judge dismissed the Writ
Petition No.44810/2001 filed by the respondents vide order
dated 20.03.2006, which led to filing of Writ Appeal No.877/2006
before the Division Bench of the High Court. The learned
Judges of the Division Bench, while hearing the appeal, also
called for the papers of the aforesaid two writ petitions which
were pending before the learned Single Judge and passed the
order as aforesaid.
3. We have heard Shri C.U. Singh, learned senior counsel for the
appellant and Shri S.G. Hasnen, learned senior counsel appearing
for the respondents.
4. Shri C.U. Singh submits that, the reasoning of the Division Bench
to the effect that since the Schedule of the said Act does not
contain provisions with regard to transfer and therefore the 1999
amendment itself was not tenable is without substance. He further
submits that, as per Section 3 of the said Act, though for every item
in the Schedule a provision has to be made in the Standing Order,
there is no restriction for providing of additional items. He further
submits that, in view of provisions of Section 7 read with Section
10(3), the modified Standing Order would have taken effect only
after the period of seven days from the date on which the copies of
the order of the Appellate Authority are sent to the employer and to
the trade union or other prescribed representatives of the workmen
under sub-Section (2) of Section 6 of the said Act. It is submitted
964 [2024] 3 S.C.R.
Digital Supreme Court Reports
that the 1999 modification was challenged by way of an appeal and
the said appeal was dismissed. The writ petition challenging the said
appellate order was also dismissed and therefore during the period in
which the transfers were made, it was the Standing Orders certified
on 03.07.1989, which were in vogue.
5. Shri Singh further submits that, even if the words from Clause 20
as were directed to be deleted by the amendment of 30.09.1999;
still, in view of the law laid down by this Court in the case of Cipla
Ltd. vs Jayakumar R. and Another1, the transfer of workmen from
Sirsi Factory to Pune Factory could not be interfered.
6. Learned counsel for the respondents, on the contrary submits that,
learned Judges of the Division Bench have rightly held that there
was no power to provide stipulation for transfer in the Standing Order
and therefore, the Division Bench of the Karnataka High Court has
rightly held the 1999 amendment to be unsustainable.
7. We find that, for deciding the present appeal, it would not be necessary
for us to address the first two issues raised by Shri C.U. Singh,
inasmuch as, even for the sake of argument if it is accepted that
the words directed to be deleted by the amendment of 30.09.1999
are deleted from Clause 20, still in view of the law laid down by this
Court in the case of Cipla Ltd. (supra) the transfers could not have
been held to be invalid.
8. It will be relevant to refer to paragraph 3 of the judgment of this
Court in the case of Cipla Ltd. (supra), which refers to Clause 3
and Clause 11 of the terms of appointment. It reads thus:
“3. Briefly stated the facts are that the respondent was
appointed as a mechanic by a letter of appointment dated
31-1-1983 in the appellant›s establishment at Bangalore.
Two of the terms of appointment which are relevant for
the purposes of the present case namely clause 3 and
clause 11 are as follows:
Clause 3:
You will be in full time employment with the
Company. You are required to work at the
1 (1999) 1 SCC 300
[2024] 3 S.C.R. 965
M/s. Divgi Metal Wares Ltd. v.
M/s. Divgi Metal Wares Employees Association & Anr.
Company’s establishment at Bangalore or at any
of its establishments in India as the Company
may direct without being entitled to any extra
remuneration. You shall have to carry out such
duties as are assigned to you, diligently and
during such hours as may be stipulated by the
management from time to time. While you are
in service, you shall not be employed elsewhere
or have any interest in any trade or business.
Clause 11:
You will be governed by the Standing Orders
applicable for workmen of the Company, a copy
of which is attached for your reference.”
9. It will also be relevant to refer to paragraph 9 of the judgment of
this Court in the case of Cipla Ltd. (supra), wherein the argument
on behalf of the employee and the relevant clause in the Standing
Order applicable to the parties have been reproduced. It reads thus:
“9. It was vehemently contended by the learned counsel for
the respondent that notwithstanding the aforesaid clause
3 in the letter of appointment the position in law is that if
there is any clause which is in conflict with the Standing
Orders then the Standing Orders must prevail. It was
submitted that clause 11 of the letter of appointment clearly
stipulated that the Standing Orders would be applicable.
The learned counsel drew our attention to the relevant
clause in the Standing Orders which reads as follows:
“A workman may be transferred from one
department to another, or from one section
to another or from one shift to another within
factory/Agricultural Research Farm, provided
such transfers do not involve a reduction in his
emoluments and grade. Worker who refuses
such transfers are liable to be discharged.”
10. In the said case, it was sought to be argued on behalf of the
employees that when the Standing Order talks of transfer, it permits
the transfer only in terms of the said clause and transfer de hors
the same was not permissible. The argument was accepted by the
966 [2024] 3 S.C.R.
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learned Single Judge as well as the Division Bench of the High
Court. While reversing the order of the learned Single Judge this
Court observed thus:-
“12. In our opinion, the aforesaid construction does not
flow from the provisions of the Standing Orders when read
along with the letter of appointment and, therefore, the
conclusion arrived at by the High Court was not correct.
As has already been noticed the letter of appointment
contains both the terms namely for the respondent being
transferable from Bangalore as well as with regard to
the applicability of the Standing Orders. These clauses,
namely, Clauses 3 and 11 have to be read along with the
Standing Orders, the relevant portion of which has been
quoted hereinabove. Reading the three together we do
not find that there is any conflict as has been sought to
be canvassed by the learned Counsel for the respondent.
Whereas the Standing Orders provide for the department
wherein a workman may be asked to work within the
establishment itself at Bangalore, Clause 3 of the letter
of appointment, on the other hand, gives the right to the
appellant to transfer a workman from the establishment at
Bangalore to any other establishment of the Company in
India. Therefore, as long as the respondent was serving
at Bangalore he could be transferred from one department
to another only in accordance with the provisions of the
Standing Orders but the Standing Orders do not in any
way refer to or prohibit the transfer of a workman from
one establishment of the appellant to another. There is
thus no conflict between the said clauses.”
11. It could thus be seen that, this Court has clearly held that, when
Clauses 3 and 11 of the appointment order are read alongwith the
Standing Order, there is no conflict as was sought to be canvassed
by the employee. It has been held that, whereas the Standing
Orders provided for the department wherein a workman may be
asked to work within the establishment itself in Bangalore, Clause
3 of the letter of appointment, on the other hand, gives the right
to the employer to transfer a workman from the establishment at
Bangalore to any other establishment of the Company in India. It
has been held that the Standing Order does not in any way refer
[2024] 3 S.C.R. 967
M/s. Divgi Metal Wares Ltd. v.
M/s. Divgi Metal Wares Employees Association & Anr.
to or prohibit the transfer of a workman from one establishment of
the appellant to another and thus, there is no conflict between the
said clauses.
12. The terms of appointment, which fell for consideration of this Court
in the case of Cipla Ltd. (supra) are almost similar to the terms of
the appointment in the appointment order as well as the confirmation
order in the present case. They clearly stipulate that the services
are transferable to any department or any work offices belonging
to the company. It is further clarified that; upon transfer, the terms
and conditions stipulated in the appointment order would continue
to apply and the employees would be governed by the rules and
regulations of the employment where his/her services are transferred.
13. Even for a moment if it is accepted that the reasoning of the Division
Bench that the amendment to clause 20 of the Standing Order by
order dated 30.09.1999 is not permissible; still, in view of the law laid
down by this Court in the case of Cipla Ltd. (supra), it would make
no difference. If the reasoning of the Division Bench is accepted,
Clause 20 would read as under:-
“20. Transfers: An employee shall be liable to be transferred
at any time from one department to another within the
same unit/factory/office/establishment or from one job of
similar nature and capacity to another job of same nature
and capacity from one job to another similar job or from
one shift to another shift, provided such a transfer does
not affect his normal wages. Any refusal to accept a
transfer as above will be treated as mis-conduct as per
Rule 31.2.1949.”
14. If that be so, the clause in the Standing Order would be similar with
the clause that fell for consideration before this Court in the case of
Cipla Ltd. (supra), and as such, there would be no conflict between
the Standing Order and the terms and conditions as stipulated in the
order of appointment/confirmation. Whereas the Standing Order would
cover the transfer from one department to another within the same
unit/factory/office/establishment or from one job of similar nature and
capacity to another job of same nature and capacity and also from
one job to another similar job or from one shift to another shift. Per
contra, the terms of appointment and confirmation would permit the
transfer of an employee to any department or any works or offices
968 [2024] 3 S.C.R.
Digital Supreme Court Reports
belonging to the company. Another aspect that needs to be taken into
consideration is that clause 31 of the Schedule of the Standing Order,
which is reproduced herein above specifically provides that nothing
contained in the Standing Order shall operate in derogation of any
law for the time being in force or cause prejudice to any right under
contract of service, custom or usage or an agreement, settlement or
award applicable to the establishment. It can thus be seen that nothing
contained in the Standing Orders can operate in derogation or to the
prejudice of the provisions as provided in the contract of service.
15. In this view of the matter, we find that the Division Bench has erred
in allowing the writ petition of the respondents, thereby holding the
transfers to be illegal. Similarly, the learned Division Bench also
erred in dismissing the writ petition filed by the appellants herein,
which was filed challenging the award dated 28.02.2006. It is to be
noted that the said award was totally contrary to the earlier award
passed by the very same Tribunal on 30.05.2001.
16. For the aforesaid reasons, we find that the impugned judgment
and order is not sustainable. However, we clarify that we have not
considered the larger issue with regard to power of modification
of the standing order and leave it open to be adjudicated in an
appropriate proceeding. We find that the learned Division Bench
was in error in calling the writ petitions filed by the appellant as well
as the respondent(s) and deciding them without even discussing
the reasonings as were adopted by the learned Tribunal. It is to be
noted that, in the first order dated 30.05.2002, the learned Industrial
Tribunal apart from holding that in view of Clause 20 and in terms of
appointment and confirmation orders, the challenge to the transfer
orders was not sustainable, also after discussing the entire material
on record, found that the transfers were not mala fide.
17. The award dated 28.02.2006 only considers that Clause 20 stood
modified on 30.09.1999 and as such the transfer orders were not
permissible. However, the award passed in 2006 fails to take into
consideration that on 03.03.2001, the appeal against the modification
was partly allowed by the learned Industrial Tribunal setting aside
the order dated 30.09.1999.
18. It will be relevant to refer to Section 7 of the said Act. It reads thus:
“7. Date of operation of standing orders.- Standing
orders shall, unless an appeal is preferred under Section
[2024] 3 S.C.R. 969
M/s. Divgi Metal Wares Ltd. v.
M/s. Divgi Metal Wares Employees Association & Anr.
6, come into operation on the expiry of thirty days
from the date on which authenticated copies thereof
are sent under sub-section (3) of Section 5, or where
an appeal as aforesaid is preferred, on the expiry of
seven days from the date on which copies of the order
of the appellate authority are sent under sub-section
(2) of Section 6”
19. It could thus be seen that, in view of the provisions of Section 7, the
Standing Orders shall come into operation on the expiry of 30 days
from the date on which the authenticated copies thereof are sent
under sub-section (3) or Section 5. However, where an appeal, as
provided under sub-section (2) of Section 6 is preferred, the same
would come into operation only upon the expiry of seven days from
the date on which copies of the order of the appellate authority
are sent. Section 10 of the said Act deals with the duration and
modification of standing orders.
20. It will also be relevant to refer to sub-section (3) of Section 10 of the
said Act, which reads thus:
“10. Duration and modification of standing orders.-
(3) The foregoing provisions of this Act shall apply in respect
of an application under sub-section (2) as they apply to
the certification of the first standing orders.”
21. It could be seen from the perusal thereof that all foregoing provisions
including the provision in Section 7 of the said Act would also apply
in respect of the application under sub-section (2) as they apply
to certification of the first Standing Order. As such, in view of the
order dated 03.03.2001 passed by the learned Industrial Tribunal,
the amendment made in the year 1999 had not come into effect in
view of the appeal being allowed by the learned Tribunal.
22. We therefore find that, on the date of the orders of transfer as well as
the date on which the learned Industrial Tribunal passed the award
dated 28.02.2006, it is the 03.07.1989 Standing Order which would
be in operation. More so when the appeal challenging the same by
the respondents came to be dismissed on 06.04.1996 and which
order was not carried further by the respondents.
23. We further find that the learned Division Bench has also erred in
not taking into consideration the law laid down by this Court in the
970 [2024] 3 S.C.R.
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case of Cipla Ltd. (supra) though the said judgment was specifically
cited before it.
24. In the result, the impugned judgment and order is quashed and set
aside. Writ Appeal No. 877 of 2006 filed by the respondent No.1
is dismissed. The order dated 20.03.2006 passed by the learned
single judge in Writ Petition No. 44810 of 2001 is upheld. Writ
Petition No.31808/2003 filed by the respondent No.1 is dismissed.
Writ Petition No.7993/2006 filed by the appellant is allowed. The
order passed by the learned Tribunal dated 28.02.2006 is quashed
and set aside. However, we clarify that we have not considered the
larger issue with regard to the powers of the Certifying Officer to
provide a clause in the Standing Orders, reserving the power of the
employer to transfer its employees anywhere in India.
25. In our view, in view of the law laid down by this Court in the case of
Cipla Ltd. (supra), it was not necessary for the Division Bench to
go into the said issue, inasmuch as the facts of the case at hand,
are squarely covered by Cipla Ltd. (supra).
26. The appeals are disposed of in the aforesaid terms. There shall be
no orders as to costs.
27. Pending application(s), if any, shall stand disposed of.
Headnotes prepared by: Result of the case:
Ankitesh Ojha, Hony. Associate Editor Appeals disposed of.
(Verified by: Kanu Agrawal, Adv.)
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