Holding

The Supreme Court set aside the orders of the Industrial Court and the High Court, directing a rehearing on the existence of an employer‑employee relationship and the applicability of the cited Supreme Court precedents.

Summary

Tulip Star Hotels entered into a purchase agreement that required the introduction of a Voluntary Retirement Scheme (VRS). While most workers accepted VRS cheques, a new union of employees demanded that the VRS amounts be paid in separate cheques, which the employer refused to honor. The union filed a complaint under the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971, and the employer argued that the complaint was not maintainable in view of Supreme Court precedents on the existence of an employer‑employee relationship. The Industrial Court and the Bombay High Court upheld the complaint’s maintainability without addressing the pivotal question of the employer‑employee relationship. On appeal, the Supreme Court held that the lower courts failed to consider the essential issue and the relevant Supreme Court judgments (Vividh Kamgar, Cipla, Sarva Shramik, etc.). Consequently, it set aside the orders of the lower courts and remitted the matter to the Single Judge of the High Court for fresh consideration of the relationship, part acceptance of the VRS, and adjustment of sums payable.

Issues considered

The complaint under the Maharashtra Trade Union Act is maintainable when the existence of an employer‑employee relationship is in dispute.
Whether the Supreme Court decisions in Vividh Kamgar Sabha, Cipla Ltd., and Sarva Shramik Sangh are applicable to the present case.
The effect of partial acceptance of a Voluntary Retirement Scheme on the liability of the employer.
The appropriate forum for adjudicating the dispute concerning the VRS and alleged unfair labour practice.

Legislation cited

Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971

Subjects

Voluntary Retirement SchemeEmployer‑Employee RelationshipTrade UnionUnfair Labour PracticeMaintainabilityIndustrial Court JurisdictionPart AcceptanceMaharashtra Trade Union Act

Judgment

A TULIP STAR HOTELS AND ORS. ~,- ......
v.
UNION OF CENTAUR-TULIP EMPLOYEES AND ORS.

MAY IO, 2007

B [OR. ARIJIT PASA YAT AND LOKESHWAR SINGH PANT A, JJ.]

Maharashtra Recognition of Trade Unions and Prevention of Unfair
Labour Practices Act, 1971:

c Complaint-Maintainability of challenged-Dispute in relation to non-
acceptance of cheques of Voluntary Retirement Scheme-Company alleging
absence of employer and employee relationshi~Industrial Court and High
Court without considering the issue of maintainability and the effect of the
decisions of Supreme Court, held the complaint maintainable-Held: Since
D relevant aspects have not been considered by Industrial Court and High
Court, the impugned orders are set aside and the matter remitted to Single
Judge of High Court for reconsideration of issues and applicability of
decisions of Supreme Court.

An agreement was entered into between the appellant-Company and the
E Hotel Corporation of India for purchase of Centaur Hotel. There was •also an
agreement to the effect that a Voluntary Retirement Scheme would be
introduced within one year from the date of transfer. Later, consequent upon
a writ petition, the appellant Company was directed to consider and
independently float the YRS. The said Scheme was floated. The Schedule for
F payment was also fixed but there was delay in implementation of the YRS.
Though majority of workers accepted the cheques without demur, a request
was made by some of the employees, who had framed a new trade union, for
splitting in each case the cheque amount, i.e. the V.R.S. amount. When separate
cheques were issued, the respondents refused to accept the cheques so far as
they related to the V.R.S. The loan amount was adjusted and no objection was
G raised. Subsequently, a complaint was filed under the Maharashtra
Recognition of Trade Unions and Prevention of Unfair Labour Practice Act,
1971. The appellant-Company filed an objection contending that in view of
decisions of the Supreme Court the complaint was not maintainable. The
Industrial Court rejected the objection and held that the complaint was

H 380
TULIP STAR HOTELS v. UNION OF CENTAUR-TULIP EMPLOYEES 38 J

maintainable. The Single Judge as well as the Division Bench of the High A
- "'P-·
Court declined to interfere.

In the appeal filed by the Company it was contended that the Industrial
Court and the High Court erred in not considering the specific plea of non-
maintainability of the complaint and the effect of the decisions of the Supreme
Court which had a direct had a bearing on the issue. B
Disposing of the appeal and remitting the matter to the Single Judge of
the High Court, the Court

HELD: I. I. On the question of existence of relationship between the
employer and the employee in the background of the trade Union Act decisions C
have been rendered by Supreme Court in Vividh Kamgar Sabha and Sarva
Shramik Sangh.* Though the plea appears to have been specifically urged
before the Industrial Court and the High Court, no finding has been recorded
on the basic issue. (Para 8 and 9) (383-G, H; 384-A)

1.2. Since the relevant aspects have not been considered by the
D
Industrial Court and the High Court, the orderes of the Industrial Court, the
;,. --, Single Judge and the Division Bench of the High Court are set aside. The
i. Single Judge would reconsider the issues, as noted in the judgment.
Consideration shall be of applicability of the three judgments in Vividh
Kamgar, Cipla and Sarva Sharmik cases*. The effect of part acceptance shall E
be considered as also the question as to when there has been adjustment of
the sums payable in respect of the YRS. As the matter is pending since long
it would be appropriate for the Single Judge to dispose of the matter as early
as practicable. (Para 14) (387-A, B, q

*Vividh Kamgar Sabha v. Kalyani Steels Ltd. and Ors., (2001) 2 sec F
381; Cipla Ltd. v. Maharashtra General, Kamgar Union and Ors., (2001) 3
-J sec 101 and Sarva Sharmik Sangh v. Indian Smelting & Refining Co. Ltd.
and Ors., [2003) 10 SCC, relied on.

Vice-Chairman and Managing Director, A.P. SIDC Ltd. and Anr. v. R
Varaprasad and Ors., [2003) ll SCC 572; General Labour Union (Red Flag), G
Bombay v. Ahmedabad Mfg. & Calico Printing Co. Ltd. and Ors., [1995) Supp
1 SCC 175 and Bank ofIndia and Ors., v. K. V. Vivek Ayer and Anr., [2006) 9
sec 177, referred to.
CIVIL APPELLATE ruRISDICTION : Civil Appeal No. 2431 of2007. H
382 SUPREME COURT REPORTS [2007) 6 S.C.R.

A From the Final Judgment and Order dated 10.01.2006 of the High Court
of Judicature at Bombay in Letters Patent Appeal No. 01 of 2006 in Writ
Petition No. 3112 of 2005.

J.P. Cama, Rituraj Biswas, Rahiv Moolchandani and Gopal Singh for the
Appellants.
B
Colin Golsalves and Shyam Divan, Anubha Rastogi, Jyoti Mendiratta,
Parimal K. Shroff, Inklee Barooah, Shweta Venna, Radhika, Bina Gupta and
Himanshu Munshi for the Respondents.

The Judgment of the Court was delivered by
c
DR. ARIJIT PASA YAT, J. I. Leave granted.

2. Challenge in this appeal is to the order passed by a Division Bench
of the Bombay High Court dismissing the Letters Patent Appeal filed by the
appellants.
D
3. Factual background as presented by the appellants is as follows:

An agreement was entered into between the appellants and the Hotel
Corporation of India relating to purchase of hotel called Centaur Hotel, Juhu
Beach, on 31.3.2003. On 11.3.2002, an agreement was entered into wherein it
E was stipulated that Voluntary Retirement Scheme (in short 'YRS') shall be
introduced within one year from the transfer dated 31.5.2002 i.e by 31.5.2003.
A Writ Petition was filed on 30.5.2003 with a prayer to enforce the YRS and
alternatively it was prayed that the appellant-company be directed to
independently float and pay according to YRS. By order dated 8.7.2003, the
F High Court directed the appellant-company to consider and float the YRS.
The said scheme was floated on 1.10.2003. On 27.10.2003 there was a meeting
of the recognized Union functionaries with the functionaries of the appellant-
company. A request was made to extend the time of YRS upto 30.11.2003 to T
accept the option. This was confinned by the Union's Advocate letter dated
29.10.2003. On 29.1.2004, applications of 570 workers for YRS were accepted
G and payment was to be made by 29.4.2004. The tenns were set out in Clause
3.3. On 1.7.2004 notice of motion was taken by officers of the appellant-
company and on 2.7.2004 by the workers. The prayer essentially was to do
the needful within such time as may be detennined by the Court. In the
counter affidavit, the resolutions were refe1Ted to. One Sada Parab represented
H the Union of workers. The modalities for implementation of the YRS were fixed
TULIP STAR HOTELS"· UNION OF CENTAUR-TULIP EMPLOYEES [PASAYAT, J.] 383

- -..,_ for both the officers and the workers. The schedule for payments was also
fixed. Subsequently. there appears to be change of mind and after acceptance,
A

because offinancial difficulties there was delay in implementation of the YRS.
Majority of the workers accepted the cheques without demur. Some of the
employees formed a new trade union called "Union of Centaur Tulip
Employees". A request was made by the employees for splitting in each case B
the cheque amount i.e. YRS amount and on 5.5.2005 the writ petition was
withdrawn. Separate cheques were issued but the respondents refused to
accept the cheques so far as they related to the YRS scheme. The loan
amounts were adjusted and no objection was raised.

4. Complaint was filed under the Maharashtra Recognition of Trade C
Unions and Prevention of Unfair Labour Practices Act, 1971 (in short the
'Trade Union Act'). Objection was filed by the present appellant taking the
stand that in view of various decisions of this Court complaint was not
maintainable. The Industrial Court rejected the objection and held that the
complaint was maintainable.
D
5. Writ petition was filed by the appellant and the learned Single Judge
dismissed the same. As noted above, the Division Bench also affirmed the
views of the Industrial Court and the learned Single Judge.

6. In support of the appeal, learned counsel for the appellants submitted E
that unfortunately both the Industrial Court and the High Court did not
consider the effect of several judgments of this Court which had direct
bearing on the present issue. Before a learned Single Judge, a plea was
specifically urged but not dealt with. After having concluded that the
relationship of employer and employee existed learned Single Judge observed
that whether relationship of employer and employee existed was kept open F
and the parties are at liberty to advance evidence if any on that point. The
High Court also did not consider those aspects. It is, therefore, submitted that
the impugned orders are liable to be set aside.

7. Per contra, learned counsel for the respondents submitted that by
now the whole enquiry would have been over and unnecessarily the appellants G
have prolonged the proceedings.

8. We find that on the question of existence of relationship between the
employer and the employee in the background of the Trade Union Act several
decisions have been rendered (See Vividh Kamgar Sabha v. Kalyani Steels H
Ltd. and Anr., [2001] 2 SCC 381; Cip/a Ltd. v. Maharashtra General, Kamgar
384 SUPREME COURT REPORTS (2007) 6 S.C.R.

A Union and Ors., (2001] 3 SCC 101 and Sarva Shramik Sangh v. Indian
Smelting & Refining Co. Ltd. and Ors., (2003] IO SCC 455).

9. Though the plea appears to have been specifically urged before the
Industrial Court and the High Court, no finding has been recorded on the
basic issue. It is also necessary to take note of what has been stated by this
B Court in Vice-Chairman and Managing Director, A.P. SIDC Ltd and Anr. v.
R. Varaprasad and Ors., (2003] I 1 SCC 572. In that case it was held that
delayed payment per se did not render the scheme to be frustrated, on the
contrary, the entitlement is of monthly wages. The decision in General Labour j
Union (Red Flag). Bombay v. Ahmedqbad Mfg. & Calico Printing Co. Ltd >· ~
C and Ors., (1995] Supp 1 SCC I75 also throws considerable light on the
controversy.

I0. In Cipla 's case (supra) this Court observed that the dispute is of
summary nature. In that case it was inter alia observed as follows:

D "5 ... Therefore, the Labour Court dismissed the complaint filed by the
first respondent Union. When the matter was carried by revision
under the Act the Industrial Court dismissed the revision application
by re-iterating the views of the Labour Court.

6. In the writ petition the Division Bench of the High Court took
E a different view of the matter and allowed the complaint. Before the
High Court several decisions were referred to including the decision
of this Court in General Labour Union (Red Flag), Bombay v.
Ahmedabad Mfg. & Calico Printing Co. Ltd & Ors., [I995) Supp. I
sec 175. In that case the complaint of the Union was that 21 workmen
who were working in one of the canteens of the respondent-company
F were not given the service conditions as were available to the other
workmen of the company and there was also a threat of termination
of their services. This Court proceeded to consider the case on the
basis that their complaint was that the workmen were the employees
of the company and, therefore, the breach committed and the threats
G of retrenchme11t were cognizable by the Industrial Court or the Labour
Court under the Act. Even in the complaint no case was made out that
the workmen had ever been accepted by the company as its employees.
On the other hand, the complaint proceeded on the basis as if the
workmen were a part of the work force of the company. This Court
noticed that the workmen were never recognised by the company as
H
its workmen and it was the consistent contention of the company that
TULIP STAR HOTELS"· UNION OF CENTAUR-TULIP EMPLOYEES [PASA YAT.J.] 385

--., they were not its employees. In those circumstances, the Industrial A
--~
Court having dismissed the complaint and the High Court having
upheld the same, this Court stated that it was not established that the
workmen in question were the workmen of the company and in those
circumstances, no complaint could lie under the Act as was held by
the two courts. In that case it was the admitted position that the
workmen were employed by a contractor, who was given a contract
B
to run the canteen in question. Thereafter, the High Court adverted
to the decision of this Court in Gujarat Electricity Board, Thermal
I Power Station. Ukai, Gujarat v. Hind Mazdoor Sabha & Ors., [1995]
~
--' 5 sec 27 wherein it was noticed that the first question to be decided
would be whether an industrial dispute could be raised for abolition c
of the contract labour system in view of the provisions of the Act
and, if so, who can do so. The High Court was of the view that the
decision in General Labour Union (Red Flag), Bombay v. Ahmedabad
Mfg. & Calico Printing Co. Ltd & Ors., (supra) would make it clear
that such a question can be gone into and that the observations
would not mean that the wo1 mien had to establish by some other D

.. . -,
proceedings before the complaint is filed or that if the complaint is
filed, the moment the employer repudiates or denies the relationship
of employer and employees the court will not have any jurisdiction .
The observation of this Court that it is open to the workmen to raise
an appropriate industrial dispute in that behalf if they are entitled to E
do so has to be understood in the light of the observations of this
Court made earlier. The High Court further held that the judgment in
General Labour Union (Red Flag), Bombay v. Ahmedabad Mfg. &
Calico Printing Co. Ltd & Ors., (supra) was confined to the facts of
that case. On that basis the High Court proceeded to further consider
the matter and reversed the findings recorded by the two courts and F
_.,. gave a finding that the workmen in question are the workmen of the
appellant-company.

11. The object was also spelt out at paragraph 8. It reads as under:

"8. But one thing is clear - if the employees are working under a G
contract covered by the Contract Labour (Regulation & Abolition)
Act then it is clear that the labour court or the industrial adjudicating
authorities cannot have any jurisdiction to deal with the matter as it
falls within the province of an appropriate Government to abolish the
'-.
' same. If the case put forth by the workmen is that they have been
H
386 SUPREME COURT REPORTS [2007] 6 S. C.R.

A directly employed by the appellant-company but the contract itself is
a camouflage and, therefore, needs to be adjudicated is a matter which
can be gone into by appropriate industrial tribunal or labour court.
Such question cannot be examined by the labour court or the industrial
court constituted under the Act. The object of the enactment is,
amongst other aspects. enforcing provisions relating to unfair labour
B practices. If that is so, unless it is undisputed or indisputable that
there is employer-employee relationship between the parties, the
question of unfair practice cannot be inquired into at all. The
respondent union came to the Labour Court with a complaint that the
workmen are engaged by the appellant through the contractor and
c though that is ostensible relationship the true relationship is one of
master and servant between the appellant and the workmen in question.
By this process, workmen repudiate their relationship with the
contractor under whom they are employed but claim relationship of an
employee under the appellant. That exercise of repudiation of the
contract with one and establishment of a legal relationship with another
D can be done only in a regular industrial tribunal/court under the
1.D.Act".

12. In Sarva Shramik Sangh's case (supra) it was observed at para 24
as follows:

E "24 .... In order to entertain a complaint under the Maharashtra Act it
has to be established that the claimant was an employee of the
employer against whom complaint is made under the ID Act. When
there is no dispute about such relationship, as noted in para 9 of Cipla
case the Maharashtra Act would have full application. When that
basic claim is disputed obviously the issue has to be adjudicated by
F
the forum which is competent to adjudicate. The sine qua non for
application of the concept of unfair labour practice is the existence of
a direct relationship of employer and employee. Until that basic question
is decided, the forum recedes to the background in the sense that first
that question has to be got separately adjudicated. Even if it is
G accepted for the sake of arguments that two forums are available, the
court certainly can say which is the more appropriate forum to
effectively get it adjudicated and that is what has been precisely said
in the three decisions. Once the existence of a contractor is accepted,
it leads to an inevitable conclusion that a relationship exists between
the contractor and the complainant".
H
TULIP STAR HOTELS'" UNIONOFCENTAUR-llJLIPEMPLOYEES [PASA YAT. J.) 387
13. In Bank ofIndia and Ors. v. K.V Vivek Ayer and Anr.. [2006] 9 SCC A
I 77, it was held that after acceptance even of a part, there is no scope for
withdrawal from a scheme.

I4. Since the relevant aspects have not been considered by the Industrial
Court and the High Court, we set aside the impugned orders of the Industrial
Court and the learned Single Judge and the Division Bench and direct re- B
consideration, by learned Single Judge, of the issues, as noted above.
Consideration shall be of applicability of the three judgments in Vividh Kamgar,
Cipla and Sarva Shramik cases (supra). The effect of part acceptance shall
be considered as also the question as to when there has been adjustment of
the sums payable in respect of the YRS. As the matter is pending since long C
it would be appropriate for the learned Single Judge to dispose of the matter
as early as practicable, preferably within three months from the date of receipt
of this order. To avoid unnecessary de lay let the parties appear before the
learned Single Judge on 11.6.2007 for uearing of the matter. Learned Chief
Justice is requested to pass necessary orders in this regard. It is stated that
certain motions have been taken out. They shall be considered while hearing D
the matter in the light of the present judgment.

I5. The appeal is accordingly disposed of with no order as to costs.

RP. Appeal disposed of.