Supreme Court of India
MUKAND LTD.versusMUKAND STAFF AND OFFICERS ASSOCIATION
- Citation
- 2004 INSC 156
- Decided
- 10 March 2004
- Bench
- Y K SABHARWAL
Holding
The Tribunal could not adjudicate the service conditions of non‑workmen; the award is enforceable only against workmen, and the Tribunal's award concerning non‑workmen is set aside.
Summary
Mukand Ltd. entered into several settlements with the Mukand Staff and Officers' Association, asserting that many of its employees were not "workmen" under the Industrial Disputes Act, 1947. A dispute was referred to an Industrial Tribunal, which awarded wage increases and other benefits to both workmen and non‑workmen, holding the company estopped from contesting the status of the latter. The High Court modified the award but upheld the Tribunal's jurisdiction over non‑workmen, relying on a purported community of interest. The Supreme Court held that the reference was limited to workmen only, the Tribunal lacked jurisdiction to adjudicate claims of non‑workmen, and no estoppel or community‑of‑interest plea was pleaded. Consequently, the award could be enforced only against workmen, the Tribunal's award was set aside insofar as it covered non‑workmen, and the matter was remitted to the Tribunal for adjudication of workmen's claims alone. The Court also noted serious errors in assessing the company's financial capacity and the award's burden.
Issues considered
- The Industrial Tribunal's jurisdiction to adjudicate claims of employees who are not "workmen" under the Industrial Disputes Act, 1947.
- Whether workmen can espouse the cause of non‑workmen on the basis of a community of interest.
- The applicability of estoppel to prevent the employer from contesting the status of non‑workmen.
- The enforceability of the Tribunal's award against non‑workmen under Section 18 of the Act.
- The correctness of the High Court's modification of the award and its assessment of the company's financial burden.
Legislation cited
- General Clauses Act, 1897s. 42
- Indian Evidence Act, 1872s. 31
- Industrial Disputes Act, 1947s. 10(d), s. 12(4), s. 18, s. 19, s. 2(k), s. 2(s)
- Sick Industrial Companies (Special Provisions) Act, 1985s. 23
Subjects
Industrial Disputes Actworkmennon‑workmenindustrial tribunal jurisdictioncommunity of interestestoppelaward enforcementwage adjudicationsick industrial company
Judgment
- MUKAND LTD.
v.
MUKAND STAFF AND OFFICERS' ASSOCIATION
A
MARCH I 0, 2004
[Y.K. SABHARWAL AND DR. AR. LAKSHMANAN, JJ.] B
Industrial Disputes Act, I947-Sections JO, 2(s) and 2(k)-Industrial
Dispute-Reference to Tribunal-Scope of-Whether can cover non-workmen
C
-
also-Reference of dispute between the Company and Staff Association to the
Tribunal-Staff Association comprising also ofnon-workmen-Tribunal making
award in favour of non-workmen too-Held, not permissible.
Industrial Disputes Act, 1947-Section 2(k)-Any person-Meaning of-
Workmen espousing cause of non-workmen-Permissibility of-Workmen and
non-workmen working in the same grade-Industrial dispute between the D
Company and Assocjation of workmen and non-workmen-Dispute referred to
Tribunal-Tribunal granting award in favour of both workmen as well as
non-workmen-Association claiming that workmen and non-workmen belonging
to same grade had community of interest and workmen could espouse the
cause of non-workmen-Held, only workmen entitled to relief from the
Tribunal-Industrial Disputes Act, 1947-Section 18. E
Evidence Act, 1872-Section 31-Estoppel-Plea of-Held, cannot be
raised when not pleaded-Settlement between Company and StaffAssociation-
Staff Association comprising both workmen and non-workmen-Settlement
providing that the agreement was without prejudice to the right of the parties F
to claim that some staff members were not workmen-Benefit given by Company
to all-Dispute between parties-Dispute referred to Tribunal-Held, there
cannot be any estoppel against the Company from claiming that non-workmen
were not entitled to benefit of award-Industrial Disputes Act, 1947-Section
2(k).
G
In 1974 and 1982, the appellant-Company and the respondent-
Association concluded settlements relating to the welfare scheme and
service conditions of the employees of the appellant. In 1989 the appellant
entered into another settlement with the respondent-Association in respect
of certain benefits to be given to the members of the respondent-
951 H
952 SUPREME COURT REPORTS [2004] 2 S.C.R.
A Association. As the respondent-Association consisted of several members .........
)
who were, according to the appellant, not "workman" under the provisions
of the Industrial Disputes Act, the settlement stated that there was dispute
between the parties as to the status of substantial number of staff not being
workmen under the Industrial Disputes Act. The settlement was made
B without prejudice to the rights and contentions of both parties.
In 1991, the respondent served a Charter of Demands on the
appellant. The efforts for conciliation failed and the Government referred
the dispute between the appellant and the workmen employed under them
-
--
for adjudication to the Industrial Tribunal.
c Before the Industrial Tribunal, the appellant contended that a large
number of staff were not workmen under Section 2(s) of the Industrial
Disputes Act and therefore, no award should be made in their favour. The
appellant filed the designations and the categories of employees who were
not workmen under the Industrial Disputes Act. The appellant also
D contented that the financial condition of the appellant was not sound. In
• filed by the respondent there was no averment to
the Statement of Claim
the effect that there was community of interest between the workmen and
the non-workmen or that the appellant was estopped from claiming
exclusion of workmen in view of the settlements between the parties.
E The Industrial Tribunal in its award held that the appellant was
estopped from contending that the employees were not workmen and
granted all major demands of the respondent. The Tribunal linked the
allowances payable to the workmen to their basic pay and de-linked it from
their respective grades.
--
F The appellant filed writ petition before the High Court. Before the
High Court, the appellant filed further material to show that it was in dire
financial position. The Single Judge held that there was community of
--
interest between the workmen and non-workmen and they belonged to the
same class as they had worked and functioned in the same grades and
G therefore, the non-workmen could not be excluded from the ambit of the
Reference. The Single Judge further held that the workmen could espouse
the cause of the non-workmen. The Single Judge however, disallowed one
component of dearness allowance, namely, basic linked variable dearness
allowance. He confirmed all other increases in emoluments as.granted by ......
the Industrial Tribunal.
H I
MUKAND LTD. v. MUKAND STAFF AND OFFICERS' ASSON. 953
-· The appellant as well as the respondent filed appeals before the A
Division Bench. The appellant filed its annual report showing losses to the
company. The Division Bench held that there was community of interest
between the workmen and the non-workmen and that the workmen could
raise a dispute regarding the service conditions of non-workmen. The
Division Bench partially modified the order of the Single Judge in respect
B
--- of dearness allowance, gratuity etc.
The appellant and the respondent filed appeals by way of special
leave petitions before the Court. The respondent, contended, inter alia, that
the Court under Article 136 of the Constitution of India should not
interfere with the finding of facts arrived at by the Industrial Tribunal.
c
Allowing the appeal of the appellant and dismissing the appeal of
the respondent and remitting matter back to the Industrial Tribunal for
adjudication, the Court
HELD: 1.1. The dispute referred to by the order of Reference is only
D
in respect of workmen employed by the appellant. It is clear that the
Industrial Tribunal, being a creature of the Reference, cannot adjudicate
matters not within the purview of the dispute actually referred to it by
the order of Reference. The Industrial Tribunal could not have adjudicated
the issues of the salaries of the employees who are not workmen under
the Industrial Disputes Act nor could it have covered such employees by E
its award. Even ifthe Reference covered the non-workmen, the Industrial
Tribunal, acting within its jurisdiction under the Industrial Disputes Act,
could not have adjudicated the dispute insofar as it related to the non-
workmen. [967-D-F]
F
-- 1.2. The present award can be made effective and enforceable in
respect of only the workmen under Section 18 of the Industrial Disputes
Act. The contention of the respondent that the phrase "any person"
employed in Section 2(k) and Section 18 of the Industrial Disputes Act
covers non-workmen is not correct. The non·workmen were not necessary
parties. It is not the contention of the respondent that the Industrial G
Tribunal, after considering the material before it, arrived at a finding that
the non.workmen are a necessary party to the Reference or that it
complied with the requirement of issuing summons to the non-workmen
-· under Section 18 of the Industrial Disputes Act. [970·G]
Dimakuchi Tea Estate v. Management of Dimakuchi Tea Estate, [1958) H
954 SUPREME COURT REPORTS (2004] 2 S.C.R.
A SCR l 156; Anil Kumar Upadhyaya v. P. K. Sarkar and qrs., (1961) 2 LLJ
459; Hochtief Gammon v. Industrial Tribunal, Orrisa, (1964) 2 LLJ 460; P. ·
-
G. Brookes v. Industrial Tribunal, (1953) 2 LLJ l; Raadhakrishna Mills ltd.,
Coimbatore v. Special Industrial Tribunal, Madras and Ors., (1954) 1 LLJ
459; Narendra Kumar Sen, AIR (1953) Bombay 325; Reserve Bank of India,
B 119961 1 SCR 25 and The Workmen v. Greaves Cotton Company limited,
1197 l I 2 sec 658, referred to.
2.1. The finding of the High Court that 'workmen' and 'non- ------
workmen' belong to the same class is erroneous. The question of class to
which the employees belonged is to be decided not on the basis of grades
C in which they are placed but on the basis of their duties, responsibilities
and powers as laid down in Section 2(s) of the Industrial Disputes Act.
Workmen as well as non-workmen being in the same grade does not imply
that the distinction between the two categories ceased to exist, or that they
belonged to the same class. [972-A-B; 994-E]
D 2.2. The Industrial Tribunal totally side-stepped the evidence led by
the parties in respect of the duties, responsibilities and power of the
employees on the ground that the appellant is estopped from raising the
issue of the status of the employee. The employer and the employees by
their conduct in concluding settlements in the past could not create for,
or confer upon, an adjudicating authority jurisdiction, where none existed.
E This apart, the employer had not waived his right to raise the issue of the
status of the employees under the Industrial Disputes Act in any of the
settlements. The employer cannot be held to have waived his rights
regarding the issue of the status of the employees under the Industrial
Disputes Act in the absence of any of the settlements concluded by them
F with the employees. The Division Bench has also ignored the cumulative
effect of the Settlements of 1989 and 1995 which were concluded between
the parties without prejudice to their respective rights and contentions on
the status of the employees under the Industrial disputes Act.
[972-C; 980-B-C; 984-C)
G 3.1. Disputes can be raised only by the workmen with the employer.
The workmen, however, can in appropriate cases espouse the cause of non-
workmen if there is community of interest between the workmen and the
non-workmen. (967-F-G]
3.2. In the instant case, it is an admitted fact that the community of
H
MUKAND LTD. v. MUKAND STAFF AND OFFICERS' ASSON. 955
interest or estoppel has never been pleaded and the finding rendered by A
the High Court on this issue is in the absence of pleadings. If the non-
workmen are given the status and protection available to the workmen, it
would mean that the entire machinery and procedure of the Industrial
Disputes Act would apply to the non-workmen with regard to their
employment/non-employment, the terms of the employment, the conditions B
of Labour etc. This would cast on the appellan'. th·~ onerous burden of
compliance with the provisions of the Industrial Disputes Act in respect
of non-workmen. Such situation is not envisage_d by th·~ Industrial Disputes
Act which is only designed to protect the interests of the workmen as
defined in Section 2(s) of the Industrial Disputes Act. (985-A-CJ
3.3. There were no pleadings either on the issue of 'community of
c
interest' or on the issue of 'estoppel' in the Statement of Claim filed by
the respondent before the Industrial Tribunal. The findings rendered
regarding 'community of interest' or 'estoppel' in absence of pleadings
by the respondent, cannot at all be looked into. The Division Bench has
erred in holding that there is a community of interest between the D
workmen and the non-workmen and holding further that the workmen
can place a dispute regarding the service conditions of non-workmen. This
reasoning, in the absence of any pleading regarding the community of
interest is fallacious. (973-E; 980-D-E]
Bandar Singh and ,Ors. v. Nihal Singh and Ors., [2003] 4 SCC 161, E
relied upon.
4.1. The material that was placed before the Industrial Tribunal was
not considered or discussed and there was, as such, no adjudication by
the Industrial Tribunal. The whole award of the Industrial Tribunal is F
- lia6Ie to be set aside on the ground of non-application of mind by the
Industrial Tribunal to the material on record. It was not open to the High
Court, in exercise of writ jurisdiction, to modify an award which, at its
very basis, was flawed as it lacked proper application of fundamentals of
wage adjudication. [979-G; 980-E]
0
4.2. The Industrial Tribunal has exceeded its jurisdiction. It has
embarked upon an enquiry against non-workmen and, therefore, the
decision of the Industrial Tribunal is a non-compliance with the provisions
of the Industrial Tribunal Act. Therefore, the determination by an
Industrial Tribunal on the question other than the one which Statute
directed to decide, would be a decision not under the provisions of the f
956 SUPREME COURT REPORTS [2004) 2 S.C.R.
A Industrial Disputes Act. (980-F]
4.3. It is proved by the appellant that the decision of the Industrial
Tribunal is wrong and without jurisdiction or in excess of it. The Court
has jurisdiction to render justice to the wronged party and set aside the
Award of the Industrial Tribunal. The Court has jurisdiction and power
B to interfere with the award of the Industrial Tribunal. [980-G]
Union of India v. Tarachand Gupta and Bros., (1971] l SCC 486;
Anisminic Ltd. v. The Foreign Compensation Commissioner, (1969) l All ER
208; Cellular Operators Association of India and Ors. v. Union of India and
C Ors., [2003] 3 SCC 186; Ebrahim Aboobakar and Anr. v. Custodian General
of Evacuee Property, [1952] SCR 696; Dharangadhara Chemical Works Ltd.
v. State ofSaurashtra, [1957) SCR 152; Syed Yakoob v. K. S. Radhakrishnan
and Ors., [1964) 5 SCR 64; Parry and Co. Ltd. v. P. C. Pal and Ors., [1969]
2 SCR 976; Ouseph Mathai and Ors. v. M Abdul Khadir, (2002] l SCC 319
and Fuel Injection Ltd v. Kamgar Sabha, (1978) l SCC 156, referred to.
D
5.1. The Courts below have nowhere estimated the financial burden
that would result from its judgement. This is an omission that is fatal to
the legality of the order impugned. The appellant Company is now covered
by Section 23 of the Sick Industrial Companies (Special Provisions) Act,
1985 and has become a 'Potentially Sick Industrial Company' as defined
E thereunder. [988-F-G]
Ahmedabad Mill Owners Association v. The Textile Labour Association,
[1966] l SCR 382, referred to.
5.2. None of the courts below have admitted to estimate/compute the
F total wage packets resulting from their awards/judgement for any of the
categories of employees. This is a fatal omission in the award/judgement.
The basic pay and increment structure was found to be higher than in
comparable concerns. However, the courts below have left it unremedied.
While doing so, the courts below totally ignored the cascading effect of
G high basic wage and dearness allowance not only on Provident Fund,
Gratuity and Superannuation but on other items of emoluments too.
(985-E, F; 986-A-C]
6. The time-tested system and practice of allowances linked to grades
has been changed by the Award. For decades in the pre-Award period,
H allowances like House Rent Allowance, Leave Travel Allowance etc were
MUKAND LTD. 1·. MUKAND STAFF AND OFFICERS' ASSON. [LAKSHMANAN, J.] 957
higher for the higher grades and there were thus financial benefits of A
promotions when the employee promoted from the lower to the higher
grades and entrusted with higher responsibilities. Under the Award of the
Industrial Tribunal, the allowances are linked to basic pay and are de-
linked from the grades. There is no application of mind or any discussion
on analysis or any reason adduced in support of the above-mentioned
change in the time-tested system and practice .mywhere in the Award/ B
Judgement of the courts below. As a result, financial benefits arising from
promotions are rendered nugatory- in fact, the Award has virtually
abolished the financial benefits on account of promotions.
(986-G-H; 987-A-B]
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5601 of
c
2001.
From the Judgment and Order dated 26.4.2001 of the Bombay High
Court in A.No. 194 of 2000.
D
WITH
C.A.Nos. 7340-7341 of 200 I.
.Ashok H. Desai, P.K. Rele, Hitesh Buch, Ms. Anima Kapadia, K.P.K.
Nair, Ms. Indu Malhotra, Ms. Ruchi Khurana, Ms. Shilpi Srivastava and Ms. E
V. Deepa for the Appellant.
K.K. Singhvi, Sanjay Singhvi, B.N. Singhvi andVinay Kumar Garg for
the Respondent.
The Judgment of the Court was delivered by
F
DR. AR. LAKSHMANAN, J. The present case raises an important
issue of vital public importance, namely, whether the Industrial Tribunal was
justified in adjudicating upon the service conditions of employees, who are
not "workmen" under the Industrial Disputes Act, 1947 and are hence clearly
outside its jurisdiction. G
Civil Appeal No. 5601 of 2001 was filed by the appellant-Company
against the common final judgment and order of the Division Bench of the
High Court of Judicature at Bombay in Appeal No. 194 of 2000. The said
appeal was filed by the Company against the judgment dated 01.12.1999 of
the learned single Judge in Writ Petition No.1705 of 1998 which was filed H
958 SUPREME COURT REPORTS [2004) 2 S.C.R.
A by the Company against the award of the Industrial Tribunal in Reference
being Reference (IT) No. 3 of 1993 which arose out of the demands of the
-
respondent-Union.
Civil Appeal Nos. 7340 and 7341 of 200 l were filed by the Union
against the judgment and order in Appeal No. 441 of 2000 which was filed
B by the Union impugning the judgment dated 01.12.1999 of the learned single
Judge in Writ Petition No. 1705 of 1998 by which the single Judge had
reduced the extent of dearness allowance granted under the award of the
Industrial Tribunal.
We shall take Civil Appeal No. 5601 of 2001 filed by the Company
C against the judgment and order of the Division Bench for consideration and
the decision taken on this appeal will also govern the other two appeals filed
by the Staff and Officers' Association in Civil Appeal Nos. 7340 and 7341
of 2001.
D The appellant-Company concluded a Settlement with the respondent-
Association on 14.08.1974 whereby welfare scheme for the staff and officers,
jointly funded and managed by the Company and the Association did not
create any condition of service. The Company concluded a settlement on
09 .06.1982 covering service conditions of all staff and officers including
those in Grades 01 and 00. According to the Management, this was a unique ..
E settlement in that at the instance the Chairman and Managing Director of the
Company, the Association determined for itself and recommended the quantum
of increase in emoluments for the staff and officers which the Company
accepted and implemented through the said settlement. On 24.02.1989, the
-
appellant-Company concluded a Settlement with the respondent-Association
F which stated, inter a/ia, that "It is the Company's contention that a substantial
number of the staff, not being 'workmen' under Section 2(s) of the Industrial
Disputes Act, 1947 (hereinafter referred to as 'the Act') are not covered by
the provisions of the Act. Without prejudice to the rights and contentions of
both the parties with regard to the applicability of the provisions of the Act,
the parties have reached a comprehensive Settlement covering in addition to
G the demands made in the said 'Charter of Demands'' the issue of annual
bonus as well, under Section 12(3) and 18(3) of the Act read with Rule 62
of the Industrial Disputes (Bombay) Rules, 1957 in conciliation proceedings
on the following terms".
"This Settlement did not cover employees in Grade 01 and 00 who
H are General Foremen or Senior Officers and Asstt. General Foremen
MUKAND LTD. i·. MUKAND STAFF AND OFFICERS' ASSON. [LAKSHMANAN, J.] 959
--· or Officers". A
On 04.11.1991, the respondent-Association served a Charter of Demands
on the Company. Failure report was submitted by Conciliation Officer on
31.10.1992. The Government of Maharashtra, by its Order dated 17.02.1993,
referred the dispute for adjudication to the Industrial Tribunal. The text of the
-- Order issued by the Government of Maharashtra is reproduced below:
"ORDER
Industrial Disputes Act, 1947:-
B.
No. ADM 3092/2i867/CR 2001/Lab-3. - Whereas the Government C
of Maharashtra has considered the report submitted by the conciliation
Officer under sub-section (4) of section 12 of the Industrial Disputes
Act, 1947 (XIV of 1947), in respect of the dispute between Mis.
Mukand Ltd., L.B.S. Marg, Kur/a, Bombay 400 070 and the workmen
employed under them, over the demands mentioned in the schedule
appended hereto. D
And whereas the Government of Maharashtra after considering
the aforesaid report is satisfied that there is a case for reference to the
dispute to an Industrial Tribunal.
Now, therefore, in exercise of the powers conferred by clause (d) E
of sub-section (I) of section 10 read with sub-section (5) of section
12 of the Industrial Disputes Act, 194 7, the Government of
Maharashtra hereby refers the said dispute for adjudication to an
Industrial Tribunal, Bombay consisting of Shri G.S. Baj, Member
constituted under Government Notification, Industries, Energy and
Labour Department, No. IDA 0392/CR 69/Lab-3, dated the 31st F
March, 1992."
The respondent-Association filed its Statement of Claims. The appellant-
Company filed its written statement setting out in detail how the demands
raised by the respondent-Association, which according to them, were
unreasonable and pointing out that the financial position of the Company was G
not sound. It was also pointed out that barring a few categories of employees,
the bulk of employees were not 'workmen' as defined under the Act and that
the Industrial Tribunal had no jurisdiction to grant any relief to the employees
who are not .'workmen' under the Act.
The Tribunal, by its Part-I Award, directed an ad hoc payment of H ·
A
960 SUPREME COURT REPORTS [2004] 2 S.C.R.
Rs.500 per month to all employees in grades 12-00. The appellant-Company
on its own effected an additional ad hoc payment in varying amounts grade-
-
wise to employees in grades 00-09. The Tribunal, by its interim Award Part-
ll, directed payment of employees on. the basis of basic pay slab ad hoc
. amount ranging from Rs. 375 to Rs. 1050 per month to employees who had
not been granted additional ad hoc payment by the appellant- Company. The
B High Court, by its judgment and order dated 27.01.1996 in Writ Petition No.
342 of 1996 filed by the company against the said Awards, directed the
Company to deposit the amou_nts payable under the interim Award Part-II in
the Provident Fund Accounts of the concerned employees instead of disbursing
the same to them, and directed the Tribunal to dispose of the Reference on
.C or before 30.04.1996.
On 11.12.1995, the appellant-Company and the respondent-Association
concluded a Settlement on annual bonus for four years, without prejudice to
their respective rights and contentions as stated in Clause 1 of the said
settlement which stated as under:
D
"It is the Company's contention that ·a majority of the staff, on the
one hand and the officers on the other are not 'Workmen' under
,>'
Section 2(s) of the Industrial Disputes Act, 1947 and are also not
covered by the provisions of The Payment of Bonus Act, 1965. These
contentions of the Company are not, however, accepted by the
E Association. In the circumstances, it is agreed that this Settlement
shall not be cited by either party as evidence of waiver of the
contentions of the other and that both the parties shall continue to be
at liberty to raise their respective contentions on these issues on all
fora."
F An affidavit by the Vice-President of the Company - Mr. Krishnan Nair
was also filed before the Tribunal affirming the designations and categories
of employees of the appellant-Company who are not "workmen" under the
Act. The Tribunal pa;sed an award on 26.03.1998 and held that the appellant
was purportedly estopped from contending that the employees were not ·
G workmen under the Act and granted all the major demands, including revision
in basic salaries, dearness allowance, etc. in toto and rejected certain demands
like computer allowance, shift allowance also in toto. According to the
appellant, the Award was far in excess of the appellant's fil!ancial capacity
and the same ignored the well-settled industry-cum-region principle and the
-status of the employees before him.
H
MUKAND LTD. r. MU KAND STAFF AND OFFICERS' ASSON. j LAKSHMANAN. J J 961
- Being aggrieved by the Award of the Industrial Tribunal, the appellant
filed Writ Petition No. 1705 of 1998 before the High Court at Bombay. The
High Court issued rule and granted conditional stay subject to the condition,
A
inter alia, that the petitioner- Company pays to the employees 50% of the
increased salary and allowances awarded by the Tribunal, in addition to the
existing salary and allowances with effect from the date of publication of the B
Award, and that in case it is held ultimately that the said employees were not
entitled to the payments so made, the amount shall be adjusted by the appellant
in future wages.
Learned single Judge passed another Order on the same date in the
Company's Writ Petition No. 1704of1998 against another Award passed by C
another Tribunal in Reference (IT) No. 70of1998 relating to the Company's
daily-rated workmen at its factory at Kurla while admitting the said writ
petition, directing the Company to pay to the said daily-rated workmen 50%
of the increase in the allowances granted by the said Award except certain
allowances specified therein. The appellant filed an appeal before the Division
Bench against the said interim order dated 05.10.1998. The appeal was D
disposed of stating that the said order was a discretionary order and did not
warrant any interference at the interim stage. The Association filed contempt
petition in the High Court on the ground that the Company was deducting
from retrial benefits of the employees the amount that were paid to them
under the interim order dated 05.10.1998. By its order dated 19.02.2000 in E
the said petition, the Company was directed to deposit in the High Court a
-- sum of Rs. 9,52,205 recovered thus from the employees.
The Vice President of the Company filed an affidavit before the learned
single Judge on 24.06.1999 whereby he placed on record the facts on the
financial position of the Company. The affidavit affirmed, inter a/ia, the fact p
that CRISIL progressively down-graded the Company's financial standing
and that by its letter dated 01.04.1999, the said credit rating agency further
down-graded the Company's rating from "BBB_" to "BB" and further that
the said down-graded followed the down-grading done earlier as under:-
Year Year Year Year Year
Rating Rating Rating
G
Rating Rating
I995AA 1996AA- 1997A+ 1998BBB+ 1999 BB
The said letter from CRISIL showed that the rating "AA" indicated
"high safety", while "BB" indicated "Inadequate Safety". The rating as
above showed that the Company had been down-graded by as many as 9 H
962 SUPREME COURT REPORTS (2004] 2 S.C.R.
A notches between 1995 and 1999. -
·On 01.12.1999, the learned single Judge passed judgment and order
modifying the impugned Award and held that there was community of interest
between the workmen and non-workmen as they worked and functioned in
the same grades and that the Company had concluded Settlements covering
B both categories of employees in the past, and further that in the facts of the'
case, the workmen could espouse the cause of the non-workmen. The learned
single Judge disallowed the granting of one component of D.A. viz., basic
linked variable D.A. He confirmed all other increases in emoluments granted
--
by the Tribunal. The Review Petition filed by the Association against the
C judgment of the learned single Judge was also rejected by Order dated
15.02.2000. Both the appellant and the respondent preferred separate appeals
challenging the judgment of the learned single Judge. In the appeal, the
Company filed its Annual Report for the year 1999-2000 which reported a
profit of Rs. 5.85 crores but showed that when capital profits i.e. profits from
sale of land and of shares owned by the Company in other companies are
D excluded, there was, in fact, a loss amounting to Rs. 9.45 crores. The Company
also submitted statements relating to basic pay etc. to the Division Bench
during the course of hearing. According to the appellant-Company, they
suffered a loss of Rs. 40 crores during the financial year 2000-0 l as per the
audited financial results and a· chart showing the financial position of the
E Company from 1991-92 to 2000-01 was also filed.
The Division Bench passed its judgment partially modifying the learned
single Judge's Order by reducing (i) one of the 3 components of Dearness
Allowance granted by the Tribunal viz. the D.A. fixed in terms of percentages
-
of basic pay, grade-wise (ii) the number of service increments; (iii) the gratuity
F from 21 days to 15 days; and (iv) by changing the effective date for increase
in emoluments from 17.02.1993 to 01.01.1996. The Division Bench affirmed
the decision of the learned single Judge on all other points. The Order casts
as retrospective burden of approximately Rs. 35 crores upto March, 200 l and
prospective gross burden of Rs. 7 crores per annum.
G As already stated, the special appeals were filed against the common
judgment by the respective parties. According to counsel for the appellant,
the High Court has failed to correct the jurisdictional error in granting revision
of the service conditions of employees who are admittedly not 'workmen'
under the Act on the ground, inter a/ia, of community of interest and also the
H error in granting revision of service conditions of employees in breach of
MUKAND LTD. 1·. MUKAND STAFF AND OFFICERS" ASSON. [LAKSHMANAN. J. J 963
established principles of wage adjudication. This Court granted leave to appeal A
to both parties and directed the appellant-Company not to make any recovery
from the employees of the amounts paid on the basis of the interim Awards
passed by the Tribunal or by the High Court. We have heard Mr. Ashok H.
Desai, learned senior counsel appearing for the appellant-Company and Mr.
K.K. Singhvi, learned senior counsel appearing for the respondent - Staff and B
Officers' Association. Both the learned counsel advanced lengthy arguments.
In support of their contentions, they invited our attention to the various
documents and records filed before the Industrial Tribunal, before the High
Court and before this Court and also relied on many rulings of this Court.
In assailing the award and of the judgment of the High Court, Shri C
Ashok H. Desai, learned senior counsel appearing for the Company, made
the following submissions:-
(i) The Reference is limited to the dispute between the appellant-
Company and the 'workmen' employed by them.
(ii) The Tribunal, being a creature of the Reference, cannot adjudicate D
I matters not within the purview of the dispute actually referred to
it by the order of Reference.
(iii) There are no pleadings by the respondent-Staff and Officers'
~
Association regarding 'community of interest' or 'estoppel'.
(iv) The High Court and this Court have the jurisdiction and the power
E
- to interfere with the award of the Tribunal.
(v) The phrase "any person" in Section 2(k) and Section 18 of the
Act does not include 'non-workmen'.
(vi) The finding of the Court below that there is' community of interest' F
between the 'workmen' and the 'non-workmen' is based on
misconstruing of evidence and disregarding of vital facts.
(vii) The 'non-workmen' cannot be given the status and protection
available to the 'workmen' under the Act.
(viii)Estimation/computation of the total wage packet, which is a vital G
task in wage adjudication, has not been done by any of the Courts
below.
(ix) Financial burden of the award passed by the Tribunal is wrongly
assessed by the Tribunal, as observed by the learned single Judge;
however, neither the learned single Judge nor the Division Bench H
964 SUPREME COURT REPORTS [2004] 2 S.C.R.
A assessed the burden of their own judgment and order. The omission
is fatal to the legality of the impugned order. -
(x) The industry-cum-region principle has not been followed nor have
the comparisons be made in accordance with the well-settled law.
(xi) Assessment of the appellant-Company's financial capacity by the
B Courts below is riddled with serious errors.
(xii) The subsequent developments relating to the financial position of --
the appellant-Company need to be kept in mind.
(xiii)The award, after its infirmities are cured, should be made
c applicable only to the 'workmen' and not to the 'non-workmen'.
(xiv)The appellant-Company, however, undertakes to ensure that the
total wage packets of the 'non-workmen', to whom the award
further modified as above will not be applicable, ar~ not lower
than the total wage packets available to the 'workmen' under the
said award.
D
The above submissions were sought to be countered on behalf of the
respondent-Staff and Officers' Association. Mr. K.K. Singhvi, learned senior
counsel appearing for the Staff and Officers' Association submitted that
essentially there was no revision of basic wages from 1972 and only ad-l:zoc
E increases had been granted from time to time of the special pay and allowances.
There was thus an urgent and pressing need for wage revision. He made the
following submissions:-
(i) It is submitted by the respondent-Staff and Officers' Association
that the decision of the Tribunal, on a question of fact, which it
-
F has jurisdiction to determine, is not liable to be questioned in
proceedings under Article 226 of the Constitution of India unless
at the least it is shown to be fully unsupported by the evidence.
He cited the judgments of this Court in the following cases: !
I
(a) Ebrahim Aboobakar and Anr. v. ·Custodian General of
G Evacuee Property, [1952] SCR 696 at 702 (Five Judges)
(b) Dharangadhara Chemical Works Ltd v. State ofSaurashtra,
[1957] SCR 152 (Four Judges)
. (c) Syed Yakbob v. K.S. Radhakrishnan and Ors., [1964] 5 SCR
64 (Five Judges)
H
MUKAND LTD.'' MUKAND STAFF AND OFFICERS' ASSON. [LAKSHMANAN, J.] 965
(d) Parry and Co. Ltd. v. P.C. Pal and Ors., [1969] 2 SCR 976 A
(three Judges)
(e) Ouseph Mathai and Ors. v. M Abdul Khadir, [2002] I SCC
3 I 9 (Two Judges)
(ii) This Court while exercising its power under Article 136 of the B
Constitution of India in an appeal from the judgment of the High
· Court rendered in exercise of its power under Articles 226 and
227 of the Constitution of India will exercise the same power
which the High Court could exercise and will not interfere with
the finding of fact recorded by a Tribunal. The following decisions
were cited in the cases of Parry and Co. Ltd. v. P.C. Pal and C
Ors., (supra) and Fuel Injection Ltd. v. Kamgar Sabha and Anr.,
[1978] l SCC 156 for this proposition.
(iii) While exercising powers under Article 226 of the Constitution of
India, for issuance of a writ of certiorari or any other writ against
an award of Industrial Tribunal, the High Court will normally not D
take into consideration facts arising subsequent to the date of the
award.
(iv) The Industrial Tribunal by its award raised the necessary issues in
regard to the financial soundness of the Company to bear the
burden and recorded the finding in favour of the Staff and Officers' E
Association.
(v) The Industrial Tribunal also recorded the finding that the charts
regarding the financial position of various comparable companies,
which were prepared on the basis of the information submitted by
the witnesses of the Company, will have to be believed and p
considered.
(vi) The findings of the Industrial Tribunal were based on the evidence
on record and the High Court ought not to have interfered with
those findings. It was submitted that the learned single Judge has
erred in interfering with the DA Scheme framed by the Industrial G
Tribunal and that the learned single Judge did not compare the
total wage packet of Mukund with the comparable concerns. The
Division Bench had exceeded its jurisdiction and take into account
- event subsequent to the passing of the award and secondly, in
confirming the reduction in DA made by the learned single Judge.
H
966 SUPREME COURT REPORTS (2004] 2 S.C.R.
A The Industrial Tribunal having exercised its discretion and having
deprived the workmen of the benefit of the award from 1.1.1992 .,
to 17.2.1993, there was no reason whatsoever for the High Court
- \
to interfere with the discretion of the Tribunal. Though the learned
single Judge confirmed that finding, but the Division Bench
without any reason whatsoever interfered with the said discretion
B and deprived the workmen the benefit of the revision in service
conditions for four years. The Division Bench completely lost
sight of the fact and effect that the emplOyees who had retired or
had ceased to be in service of the company between 1.1.1992 to
1.1.1996 would not only not get any benefit under the award but
c such of them who had retired or had ceased to be in service after
19 .1.1994 wil 1have to refund the benefit they got under the interim
awards granted on 19.1.1994 and 18.9.1995.
(vii) The Division Bench also erred in interfering with the Gratuity
Scheme granted by the Industrial Tribunal and confirmed by the
D learned single Judge of the High Court. Arguing further, the
learned senior counsel would submit that the Industrial Tribunal
took into consideration the factthat the daily-rated workers of the
Company at the Kalwe Plant, as per agreement dated 15.2.1994,
were entitled to Gratuity of 21 days and, therefore, had granted
Gratuity of 21 days' basic + DA to the staff concerned in the
E reference. The learned single Judge confirmed the said finding.
However, the Division Bench interfered with the finding on the
ground that the Gratuity Scheme at Kalwe Plant was on the basis
of minimum attendance whereas the award gave a flat rate of
Gratuity of 21 days to all the employees.
F (viii) The Division Bench erred in interfering with the service increments
given by the Industrial Tribunal. It interfered with the service
increments only on the ground that they thought it approp~iate to
restructure the increments.
(ix) The Company should not be allowed to rely on documents which
G are not part of the Record. It is to be noted that the Company has
filed an application for bringing additional documents on record
to show that the financial condition of the Company had ,•
deteriorated after passing of the award. It was submitted by the
learned counsel that subsequent events are not at all relevant for
the purpose of assailing the award, but may be relevant if and
H
MUKAND LTD. 1· MU KAND l>T/\tF AND OFFICERS. ASSON. [LAKSHMANAN. J.] 967
when demands are made either by the workmen or the Company A
and when demands are made either by the workmen or the
Company for subsequent period and a Reference in that regard is
given by appropriate Government. It was, therefore, submitted
that the application for bringing on record the additional documents
be rejected. According to him, there are no operating losses, but B
the losses are mainly on account of the interest on borrowing for
huge investments made in associate/subsidiary/group companies
and for the expansion of the steel making capacity by setting up
a new project at Hospet.
- Learned senior counsel appearing for the respondent-Staff and Officers'
Association made additional submissions on behalf of the workmen. Regarding
C
the financial clause contained the Statute, he has made further submissions
reiterating the submissions made earlier.
We shall now analyse the submissions made by the learned senior
counsel appearing on either side with reference to the pleadings, documents, D
records and also with reference to the judgments cited.
The Reference is limited to the dispute between the Appellant-Company
and the 'workmen' employed by them.
We have already referred to the order of Reference dated 17 .2.1993 in E
paragraph supra. The dispute referred to by the order of Reference is only in
respect of workmen employed by the appellant-Company. It is, therefore,
clear that the Tribunal, being a creature of the Reference, cannot adjudicate
matters not within the purview of the dispute actually referred to it by the
order of Reference. In the facts and circumstance of the present case, the
Tribunal could not have adjudicated the issues of the salaries of the employees F
who are not workmen under the Act nor could it have covered such employees
by its award. Even assuming, without admitting, that the Reference covered
the non-workmen, the Tribunal, acting within its jurisdiction under the Act,
could not have adjudicated the dispute insofar as it related to the 'non-
workmen'.
G
It was submitted by the learned counsel appearing for the respondent
that under the Act, the dispute can be raised only by the workmen with the
- employer and that the workmen, however, can, in appropriate case, espouse
the cause of non-workmen because under the definition of 'industrial disputes'
under clause (k) of Section 2 of the said Act, the dispute may not only be H
968 SUPREME COURT REPORTS [2004] 2 S.C.R.
A related to workmen but to any person including non-workmen, provided,
however, that there is community of interest between the 'workmen' and the
'non-workmen'. It was further submitted that apart from the fact that admittedly
there are workmen in all the grades and that the workmen from one grade
look forward to promotion in the next grade comprising workmen as well as
B non-workmen, the provisions of clause (d) of sub-section (3) of Section 18
of the Act make the award not only binding on the workmen but also on the
non-workmen who may be in employment on the date of the dispute or may
have subsequently become employed in the establishment. It was further
submitted that clause (d) of sub-section (3) of Section 18 purposely uses both
C
the expressions, namely, 'workmen' and 'persons' and, therefore, both the
expressions will have to be given their proper meaning. 'Workmen' has been
defined under clause (s) .of Section 2 of the Act. The expression 'person' has
--
not been defined and, therefore, that expression will have to be given its
normal meaning. In this regard, learned counsel invited our attention to clause
(42) of Section 3 of the General Clauses Act, 1897 which states that 'person'
shall include ai:J.y Company or Association or body of individuals whether
D incorporated or not. This is an inclusive definition giving extended meaning
to the word 'person'. He also drew our attention to the Black Law Dictionary,
4th Edition, on page No,1299, it is stated that the word 'person' in its natural
and usual signification includes woman as well as man. Reliance was placed
on the decision of this Court in the case of Workmen of Dimakuchi Tea
E Estate v. The Management of Dimakuchi Tea Estate, [1958] SCR 1156 (three
----
Judges). While dealing with the definition of 'industrial dispute' contained in
Section 2(k) of the Act, this Court observed as under:-
"Therefore, when Section 2(k) speaks of the employment or non-
employment or the "terms of employment or the coQditions of labour
F of any person, it can only mean the employment or non-employment
or the terms of employment or the conditions of labour of only those
persons in the employment or non-employment or the terms of
employment or with the conditions of labour of whom the workmen
themselves are directly and substantially
interested ...................................................... "
G
"Section 18 of the Act supports the aforesaid observations, in so
far as it makes the award binding not merely on the parties to the
H dispute, but where the party is an employer, on his heirs, successors
MUKAND LTD." MU KAND STAFF AND OFFICERS' AS SON. [LAKSHMANAN. J ] 969
or assigns and where they party is composed of workmen, on all A
persons employed in the establishment and all persons who
subsequently become employed therein. If, therefore, the dispute is a
collective dispute, the party raising the dispute must have either a
direct interest in the subject matter of dispute or a substantial foterest
therein in the sense that the class to which the aggrieved party belongs
is substantially affected thereby. It is the community of interest of the B
class as a whole - class of employers or class of workmen - which
furnishes the real nexus between the dispute and the party to the
dispute. We see no insuperable difficulty in the practical application
of this test. In a case where the party to the dispute is composed of
aggrieved workmen themselves and the subject matter of dispute relates C
to them or any of them, they clearly have a direct interest in the
dispute. Where, however, the party to the dispute also composed of
workmen, espouse the cause of another person whose employment,
or non-employment, etc., may prejudicially affect their interest, the
workmen have a substantial interest in the subject matter of dispute.
In both such cases, the dispute is an industrial dispute." D
Learned counsel also cited the decision in the case of Anil Kumar
Upadhyaya v. Sarkar (P.K. and Ors.), 1961 2 LLJ 459 and, in particular,
conclusion No.4 arrived at page 467 which reads as under:
"No.4 : From the provisions of clause (b), sub-section(3) of Section E
18 of the Act, it is to be implied that the Tribunal has power to
summon parties other than parties to the order or reference, to appear
in the proceedings as parties to the dispute. This has a reference to
proper and necessary parties, as such parties need not necessarily
belong to the category of employer or workman." F
Reliance placed on conclusion No.4 by the learned counsel appearing
for the respondent is misplaced. In our view, conclusion No.4 needs to be
read in the context of the preceding and succeeding conclusions in the said
judgment. The text of conclusion Nos. l to 7 is as under:
"( l) An industrial dispute under the Act arises between an employer G
and his workmen, where the employer (sic) is concerned.
(2) Such a dispute can only be referred for adjudication by an order
made by the appropriate Government under the Act. There is no
express provision in the Act or the Rules framed thereunder, for H
970 SUPREME COURT REPORTS [2004] 2 S.C.R.
A adding in party to the adjudicating proceedings other than parties to
the reference, by the adjudicating Court or Tribunal.
(3) Such a power may be granted by prescribing rules and/or making
0
the relevant provisions of the Code of Civil Procedure, but so far it
has not been done.
B
(4) From the provisions of Clause (b), Sub-section(3) of Section 18
of the Act, it is to be implied that the Tribunal has power to summon
parties other than parties to the order of Reference, to appear in the
proceedings as parties to the dispute. This has a reference to proper
and necessary parties, as such parties need not necessarily belong to
c the category of employer or workmen.
(5) The power to be implied from the provisions of clause (b) is to
summon such a party. The form of summons has not yet been
prescribed, but under sub-section(!) of Section 11, the Tribunal may
issue summons in its own form and follow such proceedings with
D regard to it as it may think fit, until rules framed under the Act deal
with such matter.
(6) The Form D I is not an appropriate form of summons for that
purpose.
E (7) Clause (b) of sub-section(3) of Section 18 clearly contemplates
that not only there should be such a summon but that the party
summoned should have an opportunity to show that he has been
summoned without proper cause. Such an opportunity is not given
when the party is added as a party without any notice to him, and is
compelled to join in the whole reference proceedings."
F
In the said case, following its conclusions as above, the High Court
held as under:-
"That being the law on the subject, it is clear that the order made
by the Tribunal on 24th December, 1959 is not in accordance with
G law. The Tribunal has not issued any summons as contemplated by
clause (b) of sub-section (3) of Section l 8 and has not given any
opportunity t9 the petitioner to contest the service of such a summons."
In the present appeal, it is not the contention of the respondent-Staff
and Officers' Association that the Tribunal, after considering the material
H before it, arrived at a finding that the non-workmen are a necessary party to
MUKAND LTD. 1·. MUKAND STAFF AND OFFICERS. ASSON. [LAKSHMANAN. J] 971
the reference or that it complied with the requirement of issuing summons to A
the non-workmen under Section 18 of the Act, in accordance with law.
Learned counsel appearing for the respondent cited the judgment of
this Court in the case of Hochtief Gammon v. Industrial Tribunal. Orissa,
(1964) 2 LLJ 460. Gajendragadkar P.B., CJ. While speaking for the Bench
in considering the implied power of the lndustria1 Tribunal to add parties B
observed as under :
"This question has been considered by the Madras High Court in
two reported decisions. In P.G. Brookes v. Industrial Tribunal, Madras
and-Ors., 1953 (II) LLJ I, the Division Bench of the said High Court
has held that Section I 8(b) by necessary implications gives power to C
the Tribunal to add parties. It can add necessary or proper party. He
need not be the employer or the employee. In that particular case, the
party added was the receiver and it was found that unless the receiver
was added as a party to the reference proceedings, the adjudication
itself would become ineffective. In the words used by the judgment, D
the party added was not a rank outsider or a disinterested spectator,
but was a receiver who was vitally concerned with the proceedings
before the Tribunal and whose presence was necessary to make the
ultimate award effective, valid and enforceable."
In our view, the ratio of the above judgment has not supported the E
respondent's contentions.
After referring to the decision of the Madras High Court in P. G. Brookes
v. Industrial Tribunal, (supra), in Radhakrishna Mills Ltd, Coimbatore v.
Special Industrial Tribunal, Madras and Ors. (l 954) I LLJ 295 and to the
decision of the Calcutta High Court in Anil Kumar Upadhyaya v. P.K. Sarkar F
and Ors., (l96l(II) LLJ 459), this Court has gone on to observe in the said
judgment as under:
"It would be noticed that in all these decisions, the implied power
of the Tribunal to summon additional parties in the reference
proceedings is confined only to cases where such addition appeared G
to be necessary for making the reference complete and the award
effective and enforceable. Such a power cannot be exercised to extend
the scope of the reference and to bring in matters which are not the
subject matter of the reference and which are not incidental to the
dispute which has been referred." H
972 SUPREME COURT REPORTS f2004J 2 S.C.R.
A In the present case, the non-workmen are not necessary parties. The
reference is complete, covering as it does "Mukund Ltd. and the workmen
employed by them." The award, in our opinion, can be made effective and
enforceable in respect of the workmen after its infirmities are cured. It was
submitted that in fact settlement of 1989, for instance, did not cover the
employees in Grades 0 I and 00 and yet, the same was implemented by the
B parties thereto. The finding of the High Court that the 'workmen' and the
'non-workmen' belong to the same class, in our view, is erroneous. The
question of class to which the employees belong is to be decided not on the
basis of the Grades in which they are placed but on the basis of their duties,
responsibilities and powers as laid down in Section 2(s) of the Act.
c In the instant case, the parties have adduced detailed evidence,
documentary as well as oral, on the duties, responsibilities and powers of the
employees but the Tribunal totally side-stepped the said evidence running
into more than thousand pages on the ground that the Company is estopped
from raising the issue of the status of the employees under the Act, i.e.
D whether they are 'workmen' or not. The Tribunal arrived at its decision
erroneously by ignoring the fact that (a) the Company had not waived its
rights or contentions on the issue in any of the settlements between the
parties, (b) the settlement of 1989 concluded despite all the pre-existing facts
including previous settlements, "without prejudice" to the rights and
E contentions of the parties on the issue, as already submitted, and (c) the
settlement of 1995 concluded during the pendency of the Reference before
the Tribunal which stated inter a/ia that "both the parties shall continue to be
at liberty to raise their respective contentions on these issues on all fora. In
fact the appellant-Company had identified the positions in terms of job titles
i.e., designations of employees who are not 'workmen' under the Act by
F affidavit dated 5.7.1995 of Mr. Krishnan Nair. The facts affirmed in the said
affidavit were proved by examination of witnesses and were also admitted to
be correct by General Secretary and witness of the Association vide paragraph
95 of his evidence which reads as under:
"Annexure-1 of Ex. C-29 is now shown to me, designation
G,_ mentioned therein under respective grades are broadly correct. Grades
are based on the job and responsibilities of the various categories in
the Grade. In the hierarchy in a typical production shop are downwards
to upwards i.e., daily-rated workmen, supervisors 2 to 7, supervisors,
foremen."
H
MUKAND LTD. r. MU KAND STAFF AND OFFICERS' ASSON. [LAKSHMANAN, .I] 973
It was further submitted by the learned counsel for the respondent that A
award rendered at the instance of the workmen with regard to the conditions
of service of the workman/employed in Grade 12 to 00 would have surely
affected the non-workmen working in the same factory in the same grades
and they would have been required to be given an opportunity to be heard
by the Industrial Tribunal. There is, therefore, no doubt that there is community B
-- of interest between the workmen who raised the dispute and the non-workmen
working in those grades whose cause the workmen had espoused. It is true
that the contention on behalf of the workmen all throughout has been that all
the employees concerned in the Reference are workmen under the Act. In the
alternative, it has been contended that assuming without admitting that some
of the employees are non-workmen, the Association can espouse the cause of C
the non-workmen and it is on this footing that the High Court has held that
the workmen were entitled to espouse the cause of non-workmen placed in
the same Grades. The above submission has no force.
In the event, the Tribunal never adverted to the factual material including
the evidence anywhere in its award. The Tribunal neither considered the D
factual materia.l before it nor applied the law thereto.
We, therefore, hold that the reference is limited to the dispute between
the Company and the Workmen employed by them and that the Tribunal,
being the creature of the Reference, cannot adjudicate matters not within the
purview of the dispute actually referred to it by the order of Reference. E
Community of Interest or estoppel
According to Mr. Ashok H. Desai, learned senior counsel appearing for
the appellant-Company, there are no pleadings either on the issue of
'community of interest' or on the issue of 'estoppel' in the Statement of F
Claim filed by the respondent-Staff and Officers' Association before the
Tribunal. The law, on this point, is well-settled in a catena of cases. This
Court , in its recent judgment in the case of Bondar Singh and Ors. v. Nihal
Singh and Ors., (2003) 4 SCC 161 , held as under:
G
"It is settled law that in the absence of a plea no amount of
evidence led in relation thereto can be looked into."
In this view of the matter, we are of the opinion that the findings
rendered regarding 'community of interest' or 'estoppel' in the absence of
pleadings by the Association, cannot at all be looked into. H
974 SUPREME COURT REPORTS [2004] 2 S.C.R.
A Jurisdiction and power of this Court to interfere with the award of the Tribunal
Elaborate and lengthy submissions were made by both the learned
counsel appearing on either side and many rulings were cited on this issue.
Mr. Ashok H. Desai, learned senior counsel appearing for the Company,
submitted that the High Court and this Court have the jurisdiction and power
.B to interfere with the award of the Tribunal and cited the judgment of this
Court in the case of Union of India v. Tarachand Gupta and Bros., [1971]
1 SCC 486. This Court quoted, inter alia, the following passage from Anisminic
Ltd v. The Foreign Compensation Commissioner, Lord Reid at pages 213
and 214, (1969) l All ER 208:
c ''. .... But there are many cases where, although the tribunal had
jurisdiction to enter on the enquiry, it has done or failed to do
something in the course of the enquiry which is of such a nature that
its decision is a nullity. It may have given its decision in bad faith ..
It may have made a decision which it had no power to make. It may
D have failed in the course of the enquiry to comply with the
requirements of natural justice. It may in perfect good faith have
misconstrued the provisions giving it power to act so that it failed to
deal with the question remitted to it and decided some question which
was not remitted to it. It may have refused to take into account
something which it was required to take into account. I do not intend
E this list to be exhaustive. But if it decides a question remitted to it for
decision without committing any of these errors it is as much entitled
to decide that question wrongly as it is to decide it rightly."
After quoting the above passage, this Court went on to observe in its
above-mentioned judgment as under:
F
"To the same effect are also the observations of Lord Pearce at page
233. R. v. Fulham, Hammersmith and Kensington Rent Tribunal is
yet another decision of a tribunal properly embarking on an enquiry,
that is, within its jurisdiction, but at the end of its making an order
in excess of its jurisdiction which was held to be a nullity though it
G was an order of the kind which it was entitled to make in a proper
case.
"22. The principle thus is that exclusion of the jurisdiction of the
Civil Courts is not to be readily inferred. Such exclusion, however,
is inferred where the statute gives finality to the order of the tribunal
H
MUKAND LTD. 1·. MU KAND STAFF AND OFFICERS' ASSON. [LAKSHMANAN. L] 975
on which it confers jurisdiction and provides for adequate remedy to A
do what the courts would normally do in such a proceeding before it
Even where a statute gives finality, such a provision does not exclude
cases where the provisions of the particular statute have not been
complied with or the tribunal has not acted in conformity with the
fundamental principles of judicial procedure. The word "jurisdiction" B
has both a narrow and a wider meaning. In the sense of the former,
it means the authority to embark upon an enquiry; in the sense of the
latter it is used in several aspects, one of such aspects being that the
decision of the tribunal is in non-compliance with the provisions of
the Act Accordingly, a determination by a tribunal of a question
other than the one which the statute directs it to decide would be a C
decision not under the provisions of the Act, and therefore, in excess
of its jurisdiction."
This Court in its judgment in the case of Cellular Operators Association
of India and Ors. v. Union of India and Ors., [2003] 3 SCC 186, held as
under: D
" ...... The question, therefore, that remains to be considered is,
whether from the judgment of the Tribunal, the contentions raised by
the appellants can be held to be a substantial question of law, which
requires interference with the order of the Tribunal..."
E
"But the conclusion of the Tribunal that nothing should be allowed
to stand in the way of pursuing the objective of increasing teledensity
in the country and that the decision being a policy decision, is not
liable to be interfered with by the Tribunal, cannot be sustained
inasmuch as the main grievance of the cellular operators was to the
effect that the Tribunal did not consider several materials placed F
before it on the question of level playing field nor has it given any
positive finding on that. ... On this issue, according to Mr.
Chidambaram and Mr. Vaidyanathan, huge materials had been
produced and the Tribunal never applied its mind to those materials,
being swayed away by the question that this being a policy decision, G
cannot be interfered with by the Tribunal."
Per contra, Mr. K.K. Singhvi, learned senior counsel appearing for the
Staff and Officers' Association cited the case of Ebrahim Aboobakar and
Anr. v. Custodian General of Evacuee Property, (supra) in which this Court
observed as under: H
976 SUPREME COURT REPORTS [2004] 2 S.C.R.
A "It is plain that such a writ cannot be granted to quash the decision
of an inferior court within its jurisdiction on the ground that the
decision is wrong. Indeed, it must be shown before such a writ is
issued that the authority which passed the order acted without
jurisdiction or in excess of it or in violation of the principles of
natural justice... But once it is held that the court has jurisdiction but
B while exercising it, it made a mistake, the wronged party can only
take the course prescribed by law for setting matters right inasmuch --~
as a court has jurisdiction to decide rightly as well as wrongly."
Relying on these observations, this Court in the case of Dharangadhara
C Chemical Works Ltd. v. State of Saurashtra, (supra), observed as under:
"It is equally well settled that the decision of the Tribunal on a question
of fact which it has jurisdiction to determine is not liable to be
questioned in proceedings under Article 226 of the Constitution unless
at the least it is shown to be fully unsupported by evidence."
D In the case of Syed Yakoob v. K.S. Radhakrishnan and Ors., (supra),
the Constitution Bench of this Court observed as under:
"The question about the limits of the jurisdiction of High Courts
in issuing a writ of certiorari under Art. 226, has been frequently
considered by this Court and the true legal position in that behalf is
E no longer in doubt. A writ of certiorari can be issued for correcting
errors of jurisdiction committed by inferior courts or tribunals; these
are cases where orders are passed by inferior courts or tribunals without
jurisdiction, or in excess of it, or as a result of failure to exercise
jurisdictions. A writ can similarly be issued wh~re in exercise of
F jurisdiCtion conferred on it, the Court or Tribunal acts illegally or
improperly, as for instance, it decides a question without giving an
opportunity to be heard to the party affected by the order, or where
the procedure adopted in dealing with the dispute is opposed to
principles of natural justice. There is, however, no doubt that the
jurisdiction to issue a writ of certiorari is a supervisory jurisdiction
G and the Court exercising it is not entitled to act as an appellate Court.
This limitation necessarily means that findings of fact reached by the
inferior Court or Tribunal as a result of the appreciation of evidence
cannot be reopened or questioned in writ proceedings. An error of
law which is apparent on the face of the record can be corrected by
H a writ, but not an error of fact, however, grave it may appear to be.
MUKAND LTD." MU KAND STAFF AND OFFICERS' ASSON. [LAKSHMANAN . .I ] 977
-- In regard to a finding of fact recorded by the Tribunal, a writ of A
certiorari can be issued if it is shown that in recording the said
findings, the Tribunal had erroneously refused to admit admissible
and material evidence, or had erroneously admitted iradmissible
evidence which has influenced the impugned finding. Similarly, if a
finding of fact is based on no evidence, that would be regarded as an
B
--
error of law which can be corrected by a writ of certiorari. In dealing
with this category of cases, however, we must always bear in mind
that a finding of fact recorded by the Tribunal cannot be challenged
in proceedings for a writ of certiorari on the ground that the relevant
and material evidence adduced before the Tribunal was insufficient
c
-· or inadequate to sustain the impugned finding. The adequacy or
sufficiency of evidence led on a point and the inference of fact to be
drawn from the said finding are within the exclusive jurisdiction of
the Tribunal, and the said points cannot be agitated before a writ
court. It is within these limits that the jurisdiction conferred on the
High Courts under Art. 226 to issue a writ of certiorari can be
legitimately exercised (vide Hari Vishnu Karnath v. Syed Ahmed D
Ishaque, Nagendra Nath Bora v. The Commissioner of Hills Division
and Appeals, Assam and Kaushalya Devi v. Bachittar Singh.
It is, of course, not easy to define or adequately describe what an error
of law apparent on the face of the record means. What can be corrected by
a writ has to be an error of law; but it must be such an error of law as can
E
be regarded as one which is apparent on the face of the record. Where it is
manifest or clear that the conclusion of law recorded by an inferior Court or
Tribunal is based on an obvious misinterpretation of the relevant statutory
provision, or sometimes in ignorance of it, or may be, even in disregard of
it, or is expressly founded on reasons which are wrong in law, the said F
conclusion can be corrected by a writ of certiorari. In all these cases, the
impugned conclusion should be so plainly inconsistent with the relevant
statutory provision that no difficulty is experienced by the High Court in
holding that the said error of law is apparent on the face of the record. It may
also be that in some cases, the impugned error of law may not be obvious or
patent on the face of the record as such and the Court may need an argument G
to discover the said error; but there.can be no doubt that what can be corrected
by a writ of certiorari is an error of law and the said error must, on the
whole, be of such a character as would satisfy the test that it is an error of
law apparent on the face of the record. If a statutory provision is reasonably
...... capable of two constructions and one construction has been adopted by the H
978 SUPREME COURT REPORTS (2004] 2 S.C.R.
A inferior Court or Tribunal, its conclusion may not necessarily or always be
open to correction by a writ of certiorari. In our opinion, it is neither possible
-
nor desirable to attempt either to define or describe adequately all cases of
errors which can be appropriately, described as errors of law apparent on the
face of the record. Whether or not, an impugned error is an error of law and
an error of law which is apparent on the face of the record, must always
B depend upon the facts and circumstances of each case and upon the nature
and scope of the legal provision which is alleged to have been misconstrued
or contravened."
In the case of Parry and Co. Ltd. v. P.C. Pal and Ors. (supra), this
C Court observed as under:
"The grounds on which interference by the High Court is available
in such writ petitions have by, now been well established. In Basappa
v. Nagappa it was observed that a writ of certiorari is generally
granted when a court has acted without or in excess of its jurisdiction.
D It is available in those cases where a tribunal, though competent to
enter upon an enquiry, acts in flagrant disregard of the rules of
procedure or violates the principles of natural justice where no
particular procedure is prescribed. But a mere wrong decision cannot
be corrected by a writ of certiorari as that would be using it as the
cloak of an appeal in disguise but a manifest error apparent on the
E face of the proceedings based on a clear ignorance or disregard of the
provisions of law or absence of or excess of jurisdiction, when shown,
can be so corrected. In Dharangadhara Chemical Works Ltd. v. State
of Saurashtra this Court once again observed that where the Tribunal
having jurisdiction to decide a question comes to a finding of fact,
F such a finding is not open to question under Art. 226 unless it could
be shown to be wholly unwarranted by the evidence. Likewise, in the
State of Andhra Pradesh and Ors. v. S. Sree Ram Rao this Court
observed that where the Tribunal has disabled itself from reaching a
fair decision by some considerations extraneous to the evidence and
the merits of the case or where its conclusion on the very face of it
G is so wholly arbitrary and capricious that no reasonable person can
ever have arrived at that conclusion interference under Art. 226 would
be justified."
..
In the case of Ouseph Mathai and Ors. v. M Abdul Khadir, (supra),
this Court observed as under:
H I
MlJKAND LTD. 1·. MllKAND STAFF AND OFFICERS' ASSON. I LAKSHMANAN . .I. J 979
"It is not denied that the powers conferred upon the High Court A
under Articles 226 and 227 of the Constitution are extraordinary and
discretionary powers as d4;tinguished from ordinary statutory powers ..
No doubt Article 227 confers a right of superintendence over all
courts and tribunals throughout the territories in relation to which it
exercises the jurisdiction but no corresponding right is conferred upon B
a litigant to invoke the jurisdiction under the said article as a matter
of right. In fact power under this article casts a duty upon the High
Court to keep the inferior courts and tribunals within the limits of
their authority and that they do not cross the limits, ensuring the
-- performance of duties by such courts and tribunals in accordance
with law conferring powers within the ambit of the enactments creating C
such courts and tribunals. Only wrong decisions may not be a ground
for the exercise of jurisdiction under this article unless the wrong is
referable to grave dereliction of duty and flagrant abuse of power by
the subordinate courts and tribunals, resulting in grave injustice to
any party."
D
In support of his contention that this Court while exercising its power
under Article 136 of the Constitution oflndia in an appeal from the judgment
of the High Court rendered in exercise of its powers under Articles 226 and
227 of the Constitution of India will exercise the same power which the High
Court could exercise and will not interfere with the finding of facts recorded E
by a Tribunal, learned counsel cited the judgment in the case of Parry and
Co. Ltd. v. P.C. Pal and Ors., (supra). In the said case, this Court held as
under:
"Since this is an appeal arising from a writ for certiorari, we also
would not interfere with the conclusions arrived at by the Tribunal F
except on grounds on which the High Court could have done."
In the case of Fuel Injection Ltd. v. Kamgar Sabha, (supra), this Court
observed as under:
" ..... But the present appeals are from a judgment of the High Court
under Art. 226 and so the jurisdiction of this Court in entertaining an G
appeal by special leave under Art 136 must ordinarily be confined to
what the High Court could or would have done under Art. 226."
In our view, the material that was placed before the Tribunal was not
considered or discussed and that there was, as such, no adjudication by the H
•
980 SUPREME COURT REPORTS l2004] 2 S.C.R.
I
..___
A Tribunal. The whole award of the Tribunal, in our view, is liable to be set
aside on the ground of non-application of mind by the Tribunal to the material
on record. In the first place, the Tribunal has no jurisdiction to entertain and
decide a dispute which covered within its fold "persons who are not workmen".
That the material on record before the Tribunal as regards the comparable
B concerns was admittedly "sketchy" and incomplete as observed by the learned
single Judge of the High Court and that the award based on such material
could not have been sustained.
In the instant case, the employer and the employees by their conduct
in concluding settlements in the past could not create for, or confer upon, an
C adjudicating authority jurisdiction, where none existed, in respect of employees
to whom the provisions of the Act are not applicable. This apart, the employer
had not waived his right to raise the issue of the status of the employees
under the Act in any of these settlements. The employer cannot held to have
waived his rights regarding the issue of the status of the employees under the
Act in the absence of any of the settlements concluded by them· with their
D employees. The High Court has come to the conclusion that there are grave
and fundamental errors, including the errors in assessing financial capacity,
burden etc. in the award of the Tribunal. In the instant case, the Tribunal did
not have the jurisdiction to adjudicate the present dispute inasmuch as it
pertains to the conditions of service of non-workmen. The Division Bench
E has erred in holding that there is a community of interest between the workmen
~
I
and the non-workmen and holding further that the workmen can raise a
{;....
_dispute regarding the service conditions of non-workmen. This reasoning, in
the absence of any pleading regarding the community of interest, is fallacious.
It was not open to the High Court, in exercise of writ jurisdiction, to
p modify an award which, at its very basis, was flawed as it lacked proper
application of the fundamentals of wage adjudication. The Tribunal, in this
case, has exceeded its jurisdiction. It has embarked upon an enquiry against
non-workmen and, therefore, the decision of the Tribunal is a non-compliance
~·
with the provisions of the Act. Therefore, the determination by a Tribunal on '
a question other than the one which Statute directs it to decide, would be a
G decision not under the provisions of the Act and, therefore, in exercise of its
jurisdiction is liable to be set aside.
It is proved by the appellant that the decision of the Tribunal is wrong
and without jurisdiction or in excess of it. This Court has jurisdiction to
H render justice to the wronged party, namely, the appellant and set aside the
MUKAND LTD.1·. MUKAND STAFF AND OFFICERS' ASSON. [LAKSHMANAN, J.] 98 J
same. It is showed before us that the decision of the Tribunal is not fully A
suppmted by evidence. We, therefore, hold that this Court has jurisdiction
and power to interfere with the award of the Tribunal.
The phrase "any person" in Section 2(k) and Section 18 of the Act does
not include "non-workmen".
B
Section 2(k) and Section 18 are reproduced hereunder: "(k) "industrial
dispute" means any dispute or difference between employers and
employers, or between employers (lnd workmen, or between workmen
and workmen, which is connected with the employment or non-
employment or the terms of employment or with the conditions of
labour, of any persons" c
18. Persons on whom settlements and awards are binding.- (1) A
settlement arrived at by agreement between the employer and workman
otherwise than in the course of conciliation proceeding shall be binding
on the parties to the agreement.
D
(2) Subject to the provisions of sub-section (3), an arbitration award
which has become enforceable shall be binding on the parties to the
agreement who referred the dispute to arbitration.
(3) A settlement arrived at in the course of conciliation proceedings
under this Act or an arbitration award in a case where a notification E
has been issued under sub-section (3A) of section lOA or an award
of a Labour Court, Tribunalor National Tribunal which has become
enforceable shall be binding on-
(a) all parties to the industrial dispute;
(b) all other parties summoned to appear in the proceedings as parties
F
to the dispute, unless the Board, arbitrator Labour Court, Tribunal
or National Tribunal, as the case may be, records the opinion that
they were so summoned without proper cause;
(c) where a party referred to in clause (a) or clause (b) is an employer,
his heirs, successors or assigns in respect of the establishment to G
which the dispute relates;
(d) where a party referred to in clause (a) or clause (b) is composed
......... of workmen, all persons who were employed in the establishment
or part of the establishment, as the case may be, to which the
H
982 SUPREME COURT REPORTS [2004) 2 S.C.R.
A dispute relates on the date of the dispute and all persons who
subsequently become employed in that establishment or part."
According to Mr. Ashok Desai, learned senior counsel, the phrase "any
person" in Section 2(k) and Section 18 of the Act includes a non-workman
who was a workman but retired, resigned or otherwise left the services of the
B employer during the pendency of the dispute under reference. It also includes
a person who was not a workman when the dispute was referred for
adjudication but joined the services of the employer as a workman during the
pendency of the proceedings. In this regard, it may be pointed out that the
contention of the respondent-Association that the phrase "any person"
C employed in Section 2(k) and Section 18 covers non-workmen was not !
accepted in Narendra Kumar Sen case reported in AIR (1953) Bombay 325,
the Dimakuchi Tea Estate case (supra) reported in [1958) SCR 1156, the
Reserve Bank of India case reported in [1996) I SCR 25 and in the Greaves
Cotton Company Limited cas~ reported in [1971) 2 SCC 658. This Court in
those cases has also rejected the contention regarding 'community of interest'
D between workmen and non-workmen. The learned single Judge, by
misconstruing the meaning of the ratio in the judgments above cited, arrived
at his conclusion vide para 22 of his judgment which read as under:
"22. It would, therefore, appear that the consistent view of the Supreme
Court is that the non-workmen as well as workmen can raise a dispute
E in respect of matters affecting their employment, service conditions
etc., where they have a community of interest, P.rovided they are
direct and not remote."
The fact is· that in each and every case above cited, the contention that
workmen can raise a dispute in respect of the non-workmeq was rejected by
F the Court. This issue is, therefore, answered in favour of the Company.
The findings of the Court below that there is 'community of interest' between
the workmen and the non-workmen is base~ on f!lisconstruing of evidence
and disregarding of vital facts.
G In this regard, learned senior counsel for the appellant. brought to our
notice the evidence of Mr. Krishnan Nair that the employees are interested
in promotions because of financial benefits, a universal fact, has been·
misconstrued by the Courts below as proof of community df interest between
the workmen and the non-workmen. The evidence of Mr. Krishnan Nair
H reads as follows:-
MUKAND LTD."· MUKAND STAFF AND OFFICERS' ASSON. [LAKSHMAl'IAN, J.] 983
"57. It is true that the employees are promoted from the lower grade A
to upper gr~de as the case may be, on merits. It is true that once a
workman is not always a workman. On promotion he comes out of
that category. I agree that wages scales of different grades of M.R. W.
are in hierarchy. But I deny there being any cooperation. I cannot say
whether the )employees in the lower grade have an interest in the B
promotional grade because of financial benefits. I say that it is not
true to say that they are interested. Now the witness says that the
employees will be naturally interested in promotional post because of
the financial benefits and for the reasons known to them."
The learned single Judge vide para 22 of his judgment arrived at the C
conclusion as under:
"The Company's witness Mr. Nayar has also admitted in his evidence
existence of community of interest between them. Under the
circumstances the tribunal has rightly come to the conclusion that the
respondents have a substantial interest in the subject matter of the D
dispute and there is a community of interest between the respondents
and those whose case they have espoused."
After quoting verbatim the relevant part of the evidence of Mr. Krishnan .
Nair as above, the counsel for the appellant-Company mad~ the following
submissions before the Division Bench (pages 96-97 Volume-II of the E
--- Company's appeal before this Court).
"It is submitted that the Tribunal has nowhere cited the above statement
of the Appellant Company's witness in support of its conclusions. It
is respectfully submitted that the Learned Single Judge grievously
erred in re-appraising the evidence of the Company's witness on this F
vital issue. It is further submitted that the witness had, by his statement
quoted above, stated only that the emp~oyees are interested in
promotions because of the financial benefits and that the said statement
by the witness, while stating the obvious which is indeed a universal
fact, in no way amounted to admission of any community of interest
between employees in workmen and non-workmen categories. It is G
respectfully submitted, to illustrate the point, that a Typist may become
interest in, and may rightfully aspire form promotion at some
- indeterminate point in his future career to the post of Managing
Director but such interest does not establish a community of interest
between Typists and the Managing Director. It is submitted that no H
984 SUPREME COURT REPORTS [2004] 2 S.C.R.
A material whatsoever was placed by the Respondent Association and
that no evidence was on record either before the Tribunal or before
the Learned Single Judge to show community of interest between the
two categories of employees. The Learned Single Judge erred in
picking up an isolated statement made by the Company's witness, in
total disregard of the central thrust of the whole body of his evidence
B and in holding that the Company's witness admitted, in his evidence,
. existence of such community of interest between the workmen and
the non-workmen, wholly.misconstruing the meaning of the evidence
on a vital issue which goes to the root of the dispute and on such
misinterpretation, the Learned Single Judge has built up the ratio of
c this Judgement on the issue of the status of the employees under the
Act and the jurisdiction of the Tribunal."
We have perused the Division Bench judgment on this aspect.' The
Division Bench has not even adverted to, much less dealt with, the above
submissions while confirming the learned single Judge's ruling on this issue.
D The Division Bench has also ignored the cumulative effect of the Settlements
of 1989 and 1995 which were concluded between the parties without prejudice
to their respective rights and contentions on the status of the employees
under the Act.
It is pertinent to refer to the Settlement of 1995 in this context. Clause
E
--
I of the Settlement of 1995 concluded during the proceedings in the reference
when the issue was already before the Tribunal, stated:
"Clause I of this Settlement reads : "It is the Company's contention
that a majorit)t of the staff, on the one hand and the officers on the
other are not 'workmen' under Section 2(s) of The Industrial Disputes
F Act, 194 7 and are also not covered by the provisions of The Payment
of Bonus Act, 1965. These contentions of the Company are not,
however, accepted by the Association. In the circumstances, it is
as
agreed that this Settlement shall not be cited by either party evidence
of waiver of the contentions of the other and that both the parties
G shall continue to be at liberty to ra:ise their respective contentions on
these issues on all fora."
It is thus seen that the High Court has not only disregarded of vital
,,,_
facts but also misconstrued the evide:lce of the witness of the Company. This r
issue is answered accordingly in favour of the Management.
H
MUKAND LTD. r. MUKAND STAFF AND OFFICERS' ASSON. [LAKSHMANAN, .I.) 985
. The non-workmen cannot be given the status and protection available to the A
workmen under the Act.
The above submission of learned counsel for the appellant is well
founded under the Act. Disputes can be raised only by the workmen with the
employer. The workmen, however, can in appropriate cases espouse the cause
of non-workmen if there is comm unit)' of interest between the workmen and B
the non-workmen. In the instant case, it is an admitted fact that the community
of interest or estoppel has never been pleaded and the findings rendered by
the High Court on this i.ssue is in the absence of pleadings. If the non-
workmen are g.iven the status and protection available to the workmen, it
would men that the entire machinery and procedure of the Act would apply C
to the non-workmen with regard to their employment/non-employment, the
terms of employment, the conditions of labour etc. This would cast on the
appellant-Company the onerous burden of compliance with the provisions of
the Act in respect of the non-workmen. In our view, the situation is' not
envisaged by the Act which is solely designed to protect the interests of the
workmen as defined in Section 2(s) of the Act. D
Estimation/Computation of the total wage packet, which is a vital task in
wage adjudication, has not been done by any of the Courts below.
It is argued that individual items in the wage packets can, and often do,
vary very considerably among comparable concerns. Hence, estimation/ E
computation of the total wage packets for different categories of employees
and comparison of the total wage packets among comparable concerns is
essential. As rightly pointed out by learned counsel for the appellant that
none of the Courts below have admitted to estimate/compute the total wage
packets resulting from their awards/judgments for any of the categories of F
employees. This is a fatal omission in the award/judgment. There has been
no acceptable reply from counsel for the respondent-Association on this issue.
The basic pay and increment structure, found to be higher than in
comparable concerns by the Learned Single Judge, remain unchanged by the
Learned Single Judge himself or by the Division Bench. Along with the high G
rate of Dearness Allowance granted by the Order of the Division Bench,
these have cascading effect on other items or emoluments like House Rent
Allowance which is already high at 12.5% of Basic pay plus DA and Leave
Travel Allowance which is fixed at one month's basic pay the amounts
specified in the Award.
H
986 SUPREME COURT REPORTS [2004] 2 S.C.R.
A The Tribunal had granted in toto the demands relating to scales of basic.
pay and increment structure except the demand for the merger of grades 12
and I I into grade 09. The result has been a disproportionate increase in the
basic pay and annual increments. Neither the Learned Single Judge nor the
Division Bench attempted to remedy the situation. There is no discussion or
B analysis in support of the decision to grant the demand in respect of scales
of basic pay in toto, as has been done by the Courts below.
The Learned Single Judge has observed vide paragraph 38 of his
judgment, which is at page 167 of Vol.II of the Company's Appeal, that "the
revised basic wage and the increment structure is comparatively higher than
C the comparable concerns" but h.as left the situation unchanged. The Division
Bench, too, has left it unremedied. While doing so, the Courts below totally
ignored the cascading effect of the high basic wage and dearness allowance
not only on Provident Fund, Gratuity and Superannuation but on other items
of emoluments viz., one component of DA which is related to basic pay,
House Rent Allowance and Leave Travel Allowance.
D
Annexure P-7 at pages 132 to 136 of Vol. I of the present Appeal
contain comparative data on Total Wage Packet, Basic plus DA, DA, HRA
and LTA in the Appellant Company under the Order of the Division Bench
vis-a-vis the seven other companies adopted for comparison. The data show
that the Appellant Company, despite its poor financial capacity and
E performance, now ranks among the eight companies (seven plus the Appellant
Company) No. I in respect of Total Wage Packet, No.4 in respect of Basic
plus DA, No.6 in respect of DA, No. I in respect of House Rent Allowance
(HRA) and No. I in respect of Leave Travel Allowance.
The rate of variable DA now stands raised from Rs. l.72 to Rs.3.00 for
F every change of 5 points in the Consumer Price Index which is
disproportionately high but has been left unchanged by the Division Bench.
The 'CHARTS ON INCREASES IN EMOLUMENTS GRANTED BY
THE COURTS BELOW' tendered'by the Appellant Company as directed by
G this Court during the hearing of the present Appeal contain the relevant
particulars of the demands in. dispute and the Orders by the Courts below
thereon.
The time-tested ~ystem and practice of allowances linked to grades has
been changed by the Award and the change, which is drastic, continues under
H the impugned Order of the Division Bench.
MUKAND LTD. v MUKAND STAFF AND OFFICERS. ASSON. [LAKSHMANAN . .I.] 987
For decades in the pre-Award period, the allowances like House Rent A
Allowance, Leave Travel Allowance etc. were higher for the higher grades
and there were thus financial benefits because of promotions when the
employees were promoted from the lower to the higher grades and entrusted
with higher responsibilities. Under the Award of the Tribunal, the allowances
are linked to basic pay and are de-linked from the grades, a situation that has B
been left without any modification by the learned singh. Juue;e as well as by
the Division Bench. There is no application of mind or any discussion or
analysis or any reason adduced in support, of the above mentioned change
in the time-tested system and practice anywhere in the Award/Judgements of
the Courts below. As a result, financial benefits arising from promotions are
rendered nugatory - in fact, the Award has virtually abolished the financial C
benefits on account of promotions."
The financial burden of the award passed by the Tribunal and the High
Court.
Lengthy submissions were made by counsel for both sides. Counsel for D
the appellant invited our attention to the observation made by the learned
single Judge and of the Division Bench. The learned single Judge observed
vide para 29 of his judgment as under:
"I may, however, hasten to add that Mr. Rele is right in criticising the
tribunal for not considering the total financial burden which is likely to be E
-- borne by the company as a result of the award passed by the tribunal. Even
according to the association the total burden on account of the award comes
to Rs. 35.30 crores and the net burden for the year 1999 for the monthly rated
employees and daily rated workmen at Kur la would be around Rs. 1O crores.
The tribunal has obviously committed an error in holding that the yearly F
burden on account of the award would be within the range of 3.3 crores to
3.7 crores and works out to mere 6 to 7 percent of the total profits of the
company. As a matter of fact the burden on account of the present award
itself works out to about 25% of the gross profit and this fact will have to
be borne in mind while fixing the wage structure and the concerned employees.
G
The Learned Single Judge has not however adverted to the above position
anywhere else in his Judgement later. Further, he has not estimated the burden
that would result from his own judgement.
In paragraph 22 of its Judgement, which is at pages 51-52 of Vol.I of
the present appeal, the Division Bench observed inter alia: H
988 SUPREME COURT REPORTS [2004] 2 S.C.R.
A "We would be revisiting the question of financial burden at a later.: ~·
stage of the judgment once again in considering the appropriate relief,_ if any,
that should be granted in these proceedings."
Later in the Judgement however, vide paragraph 28 thereof which is on
p,ages 76 to 78 of Vol.I of the present Appeal, the Division Bench, after
B reproducing some of the submissions made by both the parties, observed:
"We have duly taken into account the rival submissions and have
carefully considered the figures which have been submitted before us
by both the sides. The Court will have also necessarily to have regard
to the impact of the financial performance of the Company over a
c period of time. This includes the financial difficulties faced by the
Company in 1998-99. Having regard to the financial burden under
the award of the Tribunal as modified by us we are qfthe considered
view that the award of the Tribunal as modified should be made
operative not from 17th February, 1993 as directed by Industrial
D Tribunal but, with effect from lst January 1996."
The Division Bench failed to recognise that the reli.ef granted as above
is only a one-time relief and that it does not reduce the prospective burden
of the modified Award. But for the observation that the rival submissions
have been duly taken into account and carefully considered, there is no
E discussion or analysis of the submissions by the parties on the hotly contested
issue of the financial burden of the Award vis-a-vis the Company's financial
capacity.
It is further submitted that the reference to gross burden and net burden
after taking into account the tax payable by the Company in the Award/
F Judgement of the Courts below are not relevant in view of the subsequent
developments as the Appellant Company has not been paying any tax since
the year 2000-2001.
The Division Bench, like the Learned Single Judge, has in fact nowhere
estimated the financial burden that would result from its own judgement.
G This is an omission that is fatal to the legality of the Order impugned in the
present Appeal.
The Industry-cum-region principle has not been followed nor have the
comparisons been made in accordance with the well-settled law.
H The Companies adopted for comparison are not comparable in terms of
-- MUKAND LTD. v. MUKAND STAFF AND OFFICERS' ASSON. [LAKSHMANAN, J.)
the nature of the business, sales turnover, employee strength, profits and
989
other relevant parameters. The comparisons are also incorrect, as these have
A
been made as between categories of employees, which are not comparable.
The Learned Single Judge, vide paragraph 31 of his Judgement which
is at page 159 of Vol.II of the Company's Appeal, has observed:
- "The data furnished by the association in respect of the comparable
concerns is also not complete in many respects. It seems that the data
furnished is mainly in respect of the posts of peons, clerks, telephone
B
operators, watchmen, supervisors etc. and it seems that the data
concerning the staff and officers working in grade 00 to grade 5 is
rather incomplete and sketchy. The claim of the workers will have to C
be examined keeping in mind these aspects of the matter."
The Learned Single Judge, however, has not adverted to these aspects
of the matter anywhere else in his Judgment later. The Division Bench, too,
has not remedied the flaw in this aspect in its own Judgement.
D
Assessment of the appellant-Company's financial capacity by the courts
below is riddled with serious errors:
The Tribunal on this issue relied entirely on the data submitted by the
Association in respect of the Company's financial capacity. The award dealt . E
- with this topic in two short paragraphs, namely, paras 63 and 64 thereof.
"63. I have perused the Balance Sheets ·and the charts submitted by
the Union and I am of the opinion that the information tabulated by
the Union is satisfactory and correct and the computation of the gross
profits is on well laid down principles of various adjudicating p
authorities.
64. It is the contention of the Union that the financial position of the
Company is very sound. It is the Company's contention that the
financial position is not very sound. It means that the financial
condition of the Company is quite good." G
In arriving at its conclusion as above, the Tribunal ignored the serious
errors pointed out by the Company which may be seen on page 159 of
Volume-III of the present appeal in the data submitted by the Association.
The Tribunal considered average gross profit at Rs. 56.25 crores for the years
1991-92 to 1996-97, as against Rs. 34.22 crores as computed corrected by H
990 SUPREME COURT REPORTS [2004] 2 S.C.R.
'\
·A the, Company. L~amed single Judge vide para 28 of his judgment stated, inter
alia, as under:
" .. .It is true that the company has been registering losses in the last
year but that may be particularly due to the factor of recession which
has affected the industries in general. If we examine the material on
B record it is seen that the company's business is consistently growing."
Again the learned single Judge vide para 29 of his judgment went on
to observe:
"In the light of the material placed before me it is not possible to
c agree with Mr. Rele that the company's financial position is not
sound and the company is doing badly."
The Division Bench adopted, vide para 22 of its judgment, the gross
profit for six years from 1991-92 to 1996-97 at Rs. 250.418 crores and
average profit per year at Rs. 41. 736 crores based on Krishnan Nair's affidavit
D dated 04.06.1999. In doing so, the Division Bench ignored the fact that the
said data on profits included capital profits i.e., profits from sale of the shares
in other companies owned by the Appellant Company and from sale of land
etc. which had not accrued from the Company's normal business operations.
The Division Bench in fact had before it the data on profits excluding capital
E profits, which the Tribunal also had before it, but failed to take these data
into account. The relevant data are available vide Annexure P-4 on page 121
of Vol.I of the present Appeal. As may be seen from the said data, the total
gross profit for the years from 1991-92 to 1996-97 was only Rs.205.32 crores
as computed corrected by the Company after excluding capital profits. The
Division Bench also had before it relevant data for the period upto and
F including the year 1999-2000. Despite the declining trends in the financial
performance of the Company as evident from the data, the Division Bench
concluded, inter a/ia, vide paragraphs 19.8 and 19.9 of its Judgement, which
are on pages 37-39 of Vol.I of the present Appeal, as under:
"In the present case, these economic and financial indicators reflective
G of the performance and financial health of the employer establish
beyond doubt that this is a company which is financially sound."
The Division Bench further observed:
"The figures content in the annual accounts relating to the share
H capital, reserves and surplus, fixed asses, investments, networth and
MUKAND LTD. 1·. MU KAND STAFF AND OFFICERS' ASSON. [LAKSHMANAN, J.] 99 J
profits among other economic indicators are, in my view sufficient to A
indicate the financial health and standing of the Company"
In any event, the Appellant Company became a 'Potentially Sick
Industrial Company' under Section 23 of the Sick Industrial Companies
(Special Provisions) Act, 1985.
B
The fact that the Courts below were in grave error in their conclusions,
which were arrived at by ignoring vital facts and submissions placed before
them by the Appellant Company, is clear from the subsequent developments
which are pointed out briefly.
Subsequent developments relating to the financial position of the C
appellant-Company need to be kept in mind.
On this issue also arguments were advanced by both the learned senior
counsel at length. Mr. Ashok Desai, learned senior counsel, heavily relied on
the ratio of the judgment in the Ahmedabad Millowners Association ·case
reported in (1966) 1 SCR 382, the trends in respect of the change in the D
Company's financial capacity and the subsequent developments relating thereto
need to be considered by this Court, keeping in mind that the Company has
to bear the burden of the modified award for several years to come. The
judgment in the Ahmedabad Mill Owners Association case observes, inter
alia, as under: E
"The problem of constructing a wage-structure must be tackled on
the basis that such wage-structure should not be changed from time
to time. It is a long-range plan; and so, in dealing with this problem,
the financial position of the employer must be carefully examined.
What has been the progress of the industry in question; what are the F
prospects of the industry in future; has the industry been making
profits; and if yes, what is the extent of profits; what is the nature of
demand which the industry expects to secure; what would be the
extent of the burden and its gradual increase which the employer may
have to face? These and similar considerations have to be carefully G
weighed before a proper wage-structure can be reasonably constructed
by industrial adjudication."
According to Mr. Desai if the Company succeeds in its appeal, "it will
have to recover Rs. 18 crores already paid to the employees including both
workmen and non-workmen and if it does not, it will have to bear the burden H
992 SUPREME COURT REPORTS [2004] 2 S.C.R.
A of having to disburse a further sum of Rs.15.45 crores by way of balance of
arrears for the period since 01.01.1996. -
Opposing Mr. Singhvi, learned senior counsel for the respondent-
Association, contended that the High Court and this Court while exercising
powers under Article 226 and 32 of the Constitution for issuance 'Of any writ
B against an award of the Industrial Tribunal will normally ·not fake into
consideration facts arising subsequent to the date of the award. Arguing
....--;-
further, he would submit that a writ will be issued to set aside an award of
the Industrial Tribunal on the material placed on record before the Tribunal
and under sub-section 3 of Section 19 of the Act, it is, inter alia, provided
c that an award shall, subject to the provision of that section remain in operation
for a period of one year from the date on which the award becomes enforceable
under Section l 7A. Under sub-section 6 of Section 19, it is, inter alia, provided
that notwithstanding the expiry of the period of operation under sub-section
3; the award shall continue to be binding on the parties until a period of two
months has elapsed from the date on which notice is given by any party
D bound by the award to the other party or parties intimating its intention to
terminate the award. The above provisions show that an award remains binding
on the parties firstly for a period of one year from the date of its publication
and secondly until a period of two months has elapsed from the date on
which the notice of termination is given by any party bound by the award,
and no demand can be raised pertaining to that award during that period.
E
It was, therefore, submitted by Mr. Singhvi that if a party to an award
can raise fresh dispute subsequent to the award and to take into acc_ount
events subsequent to that award it will harm the interest of the workmen and
----
that the superior court exercising its power will not entertain such a plea. We
F are unable to countenance the said submission. In the instant case, the total
accumulated loss suffered by the appellant-Company as on 31.03.2003 is Rs.
225 crores. The appellant-Company is now covered by Section 23 of the Sick
Industrial Companies (Special Provisions) Act, 1985 and has become a
'Potentially Sick Industrial Company' as defined thereunder .. The Company
has suffered a further loss of Rs. 64.22 crores according to the audited results
G for the first half of the year 2003-04. If the estimated loss for the third quarter
of 2003-04 is also taken into account, the net-worth of the Company stands
totally eroded.
Opposing this submission Mr. Singhvi submitted subsequent events are
not at all relevant for the purpose of assailing the award, but may be relevant
--
H
MUKAND LTD. 1· MUKAND STAFF AND OFFICERS. ASSON. [LAKSHMANAN. J ) 993
if and when demands are made either by the workmen or the Company for A
subsequent period and a reference in that regard is given by appropriate
government. He, therefore, submitted that the application for bringing on
record the additional documents should be rejected. Mr Singhvi furtiler
submitted that the compilation filed by the Management "financial position
of the appellant-Company" require a lot of explanation and comments for
which evidence will have to be led. Without prejudice to the above submission, B
Mr. Singhvi drew our attention to the auditor's notes appended to the balance
sheet relating to loans and advances etc. read with item 3 (vi) of the report
of the auditor to the members. According to him, the balance-sheet clearly
shows that there are no operating losses but the losses are mainly on account
of the interest on borrowing for huge investments made in associate/subsidiary/ C
group companies and for the expansion of the steel making capacity by
setting up a new project at Hospet (where alone about Rs. 600 crores have
been invested) etc. and that borrowings were mainly used for such investments
and for loans and advances to associate, subsidiary and group companies
whieh have not been recovered.
D
Concluding his arguments, Mr. Ashok Desai submitted that the award,
after its infirmities are cured, should be made applicable only to the workmen
and not to the non-workmen. We see merit and substance in the above
submission. We, therefore, set aside the award and of the judgments of the
single Judge and of the Division Bench of the High Court and hold that the E
award should apply only to the workmen and that the workmen should not,
in the facts and circumstances of the case, be permitted to raise demands/
disputes on behalf of the non-workmen. We place on record the undertaking
given by the appellant-Company before us ensuring that the total wage packets
of the non-workmen to whom the award further modified as above will not
be applicable, are not lower than the total wage packets available to the F
workmen under the said award.
The appellant-Management has a prima facie case on merits and the
balance of convenience is entirely in their favour. We also hold that the
employer and the employees by their conduct in concluding settlements in
the past cannot create or confer upon an adjudicating authority jurisdiction G
where none existed in respect of employees to whom the provisions of the
Act are not applicable. In the instant case, the employer had admittedly not
waived their right to issue the status of the employees under the Act in any
. of the said settlements. The High Court, both the learned single Judge and of
the Division Bench had stepped into the shoes of the adjudicating authority H
994 SUPREME COURT REPORTS (2004] 2 S.C.R.
A and virtually modified/altered the award in vital respects like basic linked
variable D.A., D.A. fixed in forms of percentages of basic pay, service
increments, gratuity and effective dates for increase in emoluments.
The Industrial Tribunal did not have jurisdiction to adjudicate the present
dispute inasmuch as it pertains to the conditions of service of non-workmen.
B The learned single Judge and the Division Bench of the High Court failed to
appreciate that parties cannot by their conduct create or confer jurisdiction on
an adjudicating authoritY when no such jurisdiction exists. We have already
noticed that the Division Bench has erred in holding that there is community
of interest between the workmen and the non-workmen and holding further
C that the workmen could raise a dispute regarding the service conditions of
non-workmen.
The High Court further failed to appreciate that in order to secure
revision of their own grades or other items of emoluments, it was not necessary
for employees who are 'workmen' under the Act to agitate also for the
D revision of the emoluments of those who are not 'workmen', and that as such
the 'workmen' in the present, have no direct or substantial interest in the
revision of emoluments of employees who are not 'workmen', nor could the
workmen be held to be vitally interested in the tenns of employment of the
non-workmen.
E The High Court also failed to appreciate that 'workmen' as well as
non-workmen being in the same grade did not imply that the distinction
between the two categories ceased to exist, or that they belonged to the same
class.
The Division Bench has further erred in relying on the various
F settlements concluded between the parties in the past regarding the service
conditions of the employees including the settlement of 1974 relating to
welfare scheme. Both the Division Bench and the learned single Judge failed
to appreciate that none of the said settlements contained any provision, or
even a whisper thereof, of any waiver by the appellant-Company of its rights
G with regard to the status of the employees under the Act.
During the pendency of the proceedings in this Court, supplementary
affidavit was filed by the Vice President, Finance of the appellant-Company
bringing to this Court's notice certain crucial events that have occurred
subsequent to the admission of the appeal, which have a vital bearing on the
H case. It is stated therein that the appellant-Company is in dire financial straits.
MUKAND I.TD. 1·. MUKAND STAFF AND OFFICERS' ASSON. [LAKSHMANAN. J.] 995
The Company has already placed on record financial difficulties which it has A
been encountering. The present affidavit was placed on record with the updated
situation as at present. The Company has suffered a loss before tax of about
Rs. 210 crores in the financial year 2002-03 which was reduced to Rs. 157
crores after considering waivers and reduction in interest rate aggregating to
Rs. 53 crores on the basis of concessions given by the banks and financial
institutions under a restructuring package. The loss as stated above follows B
a loss before tax of Rs. 11 l crores in the previous financial year i.e. year
200 l -02 and that the losses as above are without taking into account the
arrears payable to the employees amounting to Rs. 15.45 crores. The appellant
being suffered a further loss before tax at Rs. 40 crores in the first quarter
of the current year i.e. year 2003-04 as per the unaudited financial results and C
the accumulated loss is Rs. 269 crores as on 30.06.2003 leaving a net worth
of Rs. 28 crores. Along with the affidavit annexures were filed for the year
ended 31.03.2003. According to the learned senior counsel, the Company has
now become a potentially sick industrial Company as defined by The Sick
Industrial Companies (Special Provisions) Act, 1985 since there has been an
erosion of more than 50% in the Company's peak net worth in the four D
\
' preceding years on the basis of the audited financial results for the financial
year 2002-03. The Appellant Company Is required under the provisions of
Section 23 of the said Act to report the fact of such erosion to the Board for
Industrial and Financial Reconstruction within sixty days from the date of
finalisation of the duly audited accounts of the Company for the financial E
year 2002-03 and also to take further actions specified in the said provisions.
The appellant-Company is now in the process of submitting the necessary
report to the Board for Industrial and Financial Reconstruction as required
under the said Act.
On account of adverse market conditions and unviability of the business, F
the appellant-Company was compelled to close down permanently its Machine
Tools Division at Ballabgarh in Haryana with effect from 18.12.2002.
Several other details in regard to the sickness of the company has also
been furnished. Since we are remitting .the matter to the Industrial Tribunal,
it is for the appellant-Company to place the additional materials before the G
said Tribunal for its adjudication. During the pendency of the proceedings
before the High Court and of this Court, certain directions were given in
...
,.
regard to the disbursement of certain amounts. The amounts already paid will
be adjusted towards future payments after fresh adjudication .
H
996 SUPREME COURT REPORTS [2004J 2 S.C.R.
A In the circumstances of the case, we are of the opinion it is proper to
remit the matter back to the Industrial Tribunal for adjudication according to
law since there are grave and fundamental errors including errors in assessing
financial capacity burden etc. in the award of the Tribunal.
The Industrial Tribunal is directed to adjudicate the claim of the workmen
B alone within six months from the date of receipt qf this judgment.
In the result, Civil Appeal No. 560 l of 200 I filed by Mukand Ltd. is
allowed and Civil Appeal Nos. 7340-7341 of 2001 filed by Mukand Staff and
Officers Association are dismissed. No costs.
C B.K.M.
C.A. No. 5601/2001 allowed.
C.A. No. 7340-7341/2001 dismissed.
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