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2010 DIGILAW 1494 (CAL)

Glaxo Smithkline Consumer Health Care Ltd. v. Second Labour Court

2010-12-24

ANIRUDDHA BOSE

body2010
JUDGMENT ANIRUDDHA BOSE, J. 1. IN this writ petition, the petitioner, a limited company has challenged an order passed by the learned Judge, Second Labour Court, Kolkata, allowing an application filed by the workman, being the respondent no. 5 for impleading the writ petitioner as a party to a subsisting proceeding pending before him. The respondent no. 5 was appointed by Jagatjit, Industries Ltd. (JIL) being the respondent no. 4 1 as a sales promotion representative with effect from March 22, 1994 Subsequently, there was an arrangement between the writ petitioner and JIL for transfer of two brands of JIL to the writ, petitioner, being Viva and Maltova. By an' agreement executed on February 8,2000 which was termed as "Secondary selling amerchandizing agreement" an arrangement between the petitioner and JIL was entered into,. under which the latter agreed to render' professional services in secondary selling of products under these two brands. The case of the writ petitioner is that under the said agreement, employees of JIL were to remain, with JIL only, and they were not taking up any obligation under the agreement in respect of the employees of JIL. 2. THE respondent no. 5 had remained in the same job after the ownership of these brands stood transferred to the writ petitioner. It appears that there was no change in the distribution system of the products sold under these brands. During this period, the respondent no. 5 claims to have received salary and- travelling allowance from the funds of the petitioner. The arrangement between the writ petitioner and JIL seems to have had lapsed subsequently. Thereafter, a notice was issued by the respondent no. 4 by which the petitioner was informed that he stood relieved from the service of the company with effect from April 30,2004 in accordance with Section 25-FFF of the Industrial Disputes Act 1947 (the Act) and it would be deemed that he had been retrenched. It was specified that he was entitled to compensation as laid down under Section 25-F of the Act. Along with the notice a demand draft for ? 73732/- (seventy three thousand seven hundred thirty two only) was sent to the petitioner which included his salary for the month of April 2004. The respondent no. It was specified that he was entitled to compensation as laid down under Section 25-F of the Act. Along with the notice a demand draft for ? 73732/- (seventy three thousand seven hundred thirty two only) was sent to the petitioner which included his salary for the month of April 2004. The respondent no. 4 questioned the legality of the said action and sent a communication to the Labour Commissioner, Government of West Bengal alleging that the notice of termination of his service was illegal. In this representation, the Labour Commissioner was requested to take steps for his immediate reinstatement and continuation of his service beyond April 30, 2004 either under JIL or under the writ petitioner. A conciliation proceeding had been started and the conciliation officer took steps for conciliation with JIL, but no settlement could be arrived at. A certificate in terms of Rule 12A(3) of the West Bengal Industrial Disputes Rules, 1958 (the said Rules) was issued by the Conciliation Officer about the pendency of the conciliation proceeding in accordance with the provisions of Section 10( 1B) of the Act. In this certificate it was specifically stated: "Whereas an industrial dispute relating to Alleged illegal termination of service of Suvendu Chaudhury by Jagjit Industries Ltd. 'Shantiniketan, 8, Camac St. 9th Floor, F1. Space No. 9, KoI-17 was raised by Shir Suvendu Chaudhury, Flat No. 208, May Fair Plaza, Netaji Subhas Avenue, Serampore, Dist. Hooghly, Pin. 712201 vide respondent dated May 17,2004." 3. ON the strength of such certificate, the respondent no. 4 instituted a case before the learned Second Labour Court, West Bengal, which was registered as case no. 128 of 2004, upon submission of the statement of facts. From the copies of records of the proceeding annexed to the writ petition, marked as "P9", it appears that the matter was posted for hearing on several days before the Labour Court, and JIL and the respondent no. 4 were duly represented before the Court. An application was filed sometime in the month of December 2005 by the respondent no. 5 for addition of the writ petitioner as a party to the aforesaid case. The writ petitioner filed written objection to the aforesaid application, and the matter was heard before the Labour- Court. 4 were duly represented before the Court. An application was filed sometime in the month of December 2005 by the respondent no. 5 for addition of the writ petitioner as a party to the aforesaid case. The writ petitioner filed written objection to the aforesaid application, and the matter was heard before the Labour- Court. The learned Judge of the Second Labour Court passed an order allowing the application for adding Glaxo Smithkline Beecham Consumer Health Care Ltd. (the writ petitioner herein) as a party to the said proceeding in terms of Rule 20D(2) and 24E of the Industrial Disputes Rules 1958, upon hearing the learned advocates appearing for the parties on May 8, 2006. In this order it was held: "I have very carefully gone through the decisions referred by Id. Lawyer for the purchaser company. It is well settled Rule of law that a necessary party is one without whom no order can be made effectively: a; proper party is one in whose absence an effective order can be made but whose presence is necessary for a complete and final decision on the question involved in the proceeding. Having heard submissions, advanced by both sides Id. Lawyers and on consideration of materials placed in the instant application and its written objection, it becomes clear to me that the purchaser company had terminated the agreement, dated February 8,2000 w.e.f. April 20,2004 and accordingly, the activities carried by the food division as per the said agreement came to an end. This is an admitted fact of the purchaser-company and the O.P. Crucial question for determination emerges from this agreement which is a question for determination in this proceeding. In my considered view balance of convenience regarding addition of purchaser company tilts in favour of the applicant. It would be just and proper to add the purchaser-company in the present case in whose presence an effective final order can be made. I am of further view that to arrive at a complete and final decision on the question involved in the proceeding presence of the purchaser-company 'Glaxo Smithkline Beecham Health Care Ltd' is necessary. So the instant petition had merit to be allowed. Hence it is ordered that the instant application for addition of Glaxo Smithkline Consumer Health Care Ltd. is considered and allowed on contest. So the instant petition had merit to be allowed. Hence it is ordered that the instant application for addition of Glaxo Smithkline Consumer Health Care Ltd. is considered and allowed on contest. Fix June 9, 2006 for filing W/S by the purchaser company Glaxo Smithkline Beechan Consumer Health Care Limited." 4. THIS order is under challenge before me. Learned counsel for the petitioner, Mr. Sengupta, has argued that no employer- employee relationship subsisted between the writ petitioner and the respondent no. 5 and as such the writ petitioner is neither necessary nor proper party to the said proceeding. In support of his submissions, he sought to rely on certain clauses in the agreement between the writ petitioner and JIL. In these clauses, there are provisions to the effect that all the employees of JIL would continue to be the employees of the said company only and the petitioner would acquire no liability and obligations, whether statutory or under the contract in respect of such employees. On behalf of the respondent no. 4, it was contended on the other hand that the said agreement was fraudulent and in fact the respondent no. 5 had become the employee of the writ petitioner. In this proceeding, however, in exercise of the Constitutional Writ Jurisdiction I do not wish to enter into the dispute as to whether the respondent no. 5 had become by implication the employee of the writ petitioner or not. What is impugned in this proceeding is an order adding the writ petitioner as a party in the case pending before the Labour Court. This issue has to be addressed on the basis of the origin of the dispute and the scope of power and jurisdiction of the Labour Court. I shall accordingly examine the question as to whether the course directed by the learned Judge, Second Labour Court, by impleading the writ petitioner as a party in Case no. 128 of 2004 is legal or not. Rule 20D of the West Bengal Industrial Disputes Rules 1958 contains provisions for addition of parties in a proceeding before the Industrial Tribunal/Labour Courts. The said rule provides: "R.20D. Addition of issues or parties to the proceedings. 128 of 2004 is legal or not. Rule 20D of the West Bengal Industrial Disputes Rules 1958 contains provisions for addition of parties in a proceeding before the Industrial Tribunal/Labour Courts. The said rule provides: "R.20D. Addition of issues or parties to the proceedings. (1) After the parties have filed their statements, the Industrial Tribunal/Labour Court may fix a date for framing, if necessary, issues relating to and arising out of the point or points in dispute, as referred, and matters incidental thereto, as well as- additional or subsidiary issues, not enlarging in any way the scope of the points referred for adjudication on the merits, nor adding to their number but required for dealing with extrinsic contentions raised by the parties about the reference and for its hearing. (2) The Industrial Tribunal/Labour Court may at any stage of the proceedings, either; upon or without the application of any party and on such terms as may appear to the Industrial Tribunal/Labour Court just, order that the name of any party who ought to have been joined in the reference or whose; presence before the Industrial Tribunal/ Labour Court may be necessary in order to enable the Industrial Tribunal/ Labour Court effectually and completely to adjudicate upon and settle all questions involved in the, dispute, be brought on the record: Provided that no such party shall be brought on the record without being given an opportunity to show cause by proper notice why he should not be brought on the record.' The notice to show cause shall be in Form D-3. (3) The Industrial Tribunal/Labour Court shall have power, when circumstances so require, to bring on record in the place and instead of a party to the reference, a party or parities to which the right or interest of the former has passed in the course of the proceeding before it." 5. IN support of his submissions, learned counsel for the petitioner has contended that the rules for addition of party in a civil suit would not apply in an industrial adjudication and no firm or person can be impleaded in a proceeding where there would be possibility of declaring his status as an employer and chance of such party being saddled with obligations arising from declaration of such status without raising a dispute against such party at the pre-adjudication stage. He has relied on the decision of the Hon'ble Supreme Court in the case of Hochtief Gammon v. Industrial Tribunal, Bhubaneshwar AIR 1964 SC 1746 : 1964-II-LLJ-460, Damoh Panna Sagar Rural Regional Bank v. Munna Lal Jain AIR 2005 SC 584 : (2005) 10 SCC 84 : 2005-I-LLJ-730 and Steel Authority of India v. National Union Water Front Workers AIR 2001 SC 3527 : (2001) 7 SCC 1 : 2001-II-LLJ-1087 and a judgment of this Court in the case of C.E.S.C. Ltd. v. State of West Bengal 2008-III-LLJ-251 (SC) : (2008) 3 CHN 329 in support of his submissions assailing the impugned order. 6. IT has also been argued on behalf of the petitioner that the letter issued to the respondent no. 5 was occasioned by closure of the food division of respondent no. 4. The entire issue of closure has been examined by the appropriate government after a trade union had raised an industrial dispute in relation to such closure and the dispute between JIL and their workmen has already been referred to the Fifth Industrial Tribunal by the State Government. A copy of the order of reference dated August 2,2005 has been made Annexure "P6" to the writ petition. This fact was brought to my notice in support of the petitioner's contention that the dispute if any was between JIL and their workmen and the writ petitioner could in no way be brought within the arena of conflict on the subject of closure. Reference was made to the case of Hochtief Gammon v. Industrial Tribunal, Bhubaneshwar (supra) on the issue of addition of party and it was argued that the nature and scope of the dispute cannot be enlarged through the process of addition of party. The following passage was relied upon on behalf of the petitioner from the said judgment 1964-11- LLJ-460 at pp. 464 and 465: "72. Reverting then to the question as to the effect of the power which is implied in Section 18(3)(b), it is clear that this power cannot be exercised by the Tribunal so as to enlarge materially the scope of the reference itself, because basically the jurisdiction of the Tribunal to deal with an industrial dispute is derived solely from the order of reference passed by the appropriate Government under Section 10(1). What the Tribunal can consider in addition to the disputes specified in the order of reference, are only matters incidental to the said disputes; and that naturally suggests certain obvious limitations on the implied power of the Tribunal to add parties to the reference before it, purporting to exercise its implied power under Section 18(3)(b). If it appears to the Tribunal that a party to the industrial dispute named in the order of reference does not completely or adequately represent the interest either on the side of the employer, or on the side of the employee, it may direct that other persons should be joined who would be necessary to represent such interest. If the employer named in a reference does not fully represent the interest of the employer as such, other persons who are interested in the undertaking of the employer may be joined. Similarly, if the unions specified in the reference do not represent all the employees of the undertaking, it may be open to the Tribunal to add such other unions as it may deem necessary. The test always must be is the addition of the party necessary to make adjudication itself effective and enforceable? In other words, the test may well be, would the non-joinder of the party make the arbitration proceedings ineffective and unenforceable? It is in the light of this test that the implied power of the Tribunal to add parties must be held to be limited." 7. THE impugned order was also assailed on the ground of non-disclosure of reasons. The case of Damoh Panna Sagar Rural Regional Bank v. Munna Lal Jain (supra) was referred to on the point that the impugned order ought to be quashed as no reason has been disclosed for directing addition of party. On the same point, another decision of the Hon'ble Supreme Court in the case of Union of India v. G.T.C. Industries Ltd., Bombay AIR 2003 SC 1383 : (2003) 5 SCC 106 has been cited. In this regard, it was submitted on behalf of the petitioner that the impugned order is not supported by any reason as to for what purpose the writ petitioner was being added as a party. In the order, balance of convenience was referred to in support of the decision. In this regard, it was submitted on behalf of the petitioner that the impugned order is not supported by any reason as to for what purpose the writ petitioner was being added as a party. In the order, balance of convenience was referred to in support of the decision. On behalf of the petitioner, it was contended that balance of convenience was not relevant consideration for directing addition of party. The case of CESC Ltd. v. State of West Bengal (supra) was relied upon in support of the petitioner's case that the impugned order cannot be sustained as the writ petitioner was not a party in the conciliation proceeding, and no dispute was ever raised as regards the status of the writ petitioner as the employer. On the other hand, the case of the petitioner is that the status of JIL as the employer of the respondent no. 5 was all along acknowledged by him, and the conciliation proceeding was also initiated on that basis. On this count, it was submitted that if the writ petitioner is impleaded as a party, then the scope of the dispute would stand radically changed which is impermissible in view of the judgment of the Hon'ble Supreme Court in the case of Hochtief Gammon v. Industrial Tribunal, Bhubaneshwar (supra). 8. THE case of the respondent no. 5, as argued before me by Mr. Chowdhury, learned advocate is that the Secondary Selling Agreement was in substance a labour contract, and the respondent no. 5 ought to have been absorbed in the establishment of the writ petitioner in terms of the proviso to Section 25-FF of the Act. Reliance was placed in this regard on the decision of the Air India Statutory Corporation and Others v. United Labour Union and Others AIR 1997 SC 645 : (1997) 9 SCC 377 : 1997-I-LLJ-1113 on this point. Respondent no. 5 also relied upon a decision of the Hon'ble Supreme Court in the case of State of U.P. v. A.N. Singh AIR 1965 SC 360 , and it was contended that in a given case the relationship of master and servant is a question of fact and the power of superintendence and control would largely determine such relationship. In fact, the emphasis of the argument of the respondent no. 5 before me was that there was employer-employee relationship between the writ petitioner and the said respondent. In fact, the emphasis of the argument of the respondent no. 5 before me was that there was employer-employee relationship between the writ petitioner and the said respondent. On the ratio of the decision of the Hon'ble Supreme Court in the case of Hochtief Gammon v. Industrial Tribunal, Bhubaneshwar (supra), it was submitted that in this judgment, Rule 20D was not considered. Citing the decision of the Hon'ble Supreme Court in the case of Union of India v. Maniklal Banerjee AIR 2006 SC 2844 : (2006) 9 SCC 643 : 2006-III-LLJ-517, it was contended that the judgment in the case of Hochtief Gammon v. Industrial Tribunal, Bhubaneshwar (supra) would not be a binding precedent in the facts of the present case as the aforesaid statutory provision was not considered in that case. The other authority on which reliance has been placed is a judgment of the Hon'ble Supreme Court in the case of Shangrila Food Products Ltd. v. L.I.C., India AIR 1996 SC 2410 : (1996) 5 SCC 54 , which lays down the inherent limitations on the jurisdiction of the Writ Court under Article 226 of the Constitution of India. This decision lays down certain well- established principles of law, and I shall examine the claims of the respective parties within the parameter set down in this decision. The case of the respondent no. 5 before me is that he ought to be treated as an employee of the writ petitioner. This stand has been taken in an application, being CAN 1292/2008 filed by the respondent no. 5 in connection with the main writ petition. But this is a completely new case being run by him, at variance with his complaint before the Labour Commissioner, and also inconsistent with the scope of the dispute narrated in the certificate issued by the Conciliation Officer. The respondent no. 5 has also not applied for an order in the nature of substitution before the Labour Court, on the ground that the ownership of the undertaking has changed. 9. IN these circumstances, in my opinion, to implead the writ petitioner as a party to the proceeding treating them as the new employer would considerably vary the scope of the dispute, which was not raised at the conciliation stage. 9. IN these circumstances, in my opinion, to implead the writ petitioner as a party to the proceeding treating them as the new employer would considerably vary the scope of the dispute, which was not raised at the conciliation stage. This would be contrary to the principle for addition of parties laid down by the Hon'ble Supreme Court in the case of Hochtief Gammon v. Industrial Tribunal, Bhubaneshwar (supra). It is a fact that in that case, the Hon'ble Supreme Court did not examine the provisions of Clause 20D(2) of the said Rules. But the principle of law laid down by the Hon'ble Supreme Court in that case ought to guide the construction of the said Rule. IN the case of Hochtief Gammon v. Industrial Tribunal, Bhubaneshwar (supra), the Hon'ble Supreme Court has observed that the Tribunal's power to direct addition of party is implied under Section 18(3)(b) of the Act. Even though Clause 20D of the said Rules specifically stipulates that the Labour Court or the Tribunal at any stage of the proceeding can direct addition of parties, I do not think the power or jurisdiction of the Labour Court or the Tribunal could be held to be wider than what has been laid down in the case of Hochtief Gammon v. Industrial Tribunal, Bhubaneshwar (supra). The ratio of the decision of the Hon'ble Supreme Court in the case of Union of India v. Manik Lal Banerjee (supra) thus is not applicable in the facts of this case, and 1 cannot ignore the judgment in the case of Hochtief Gammon v. Industrial Tribunal, Bhubaneshwar (supra) on the sole ground that Rule 20D was not examined in that case. I do not think the power of the Industrial Tribunal or Labour Court to direct addition of Earty is as wide as that of a civil Court. I hold so ecause an industrial dispute has to undergo certain mandatory preadjudication process, and the Labour Court cannot exercise the power in the same manner as a Court of first instance. 10. IN this proceeding, I also do not think there is any scope for examining whether the agreement between the writ petitioner and JIL was a labour contract or not. No such dispute had been raised before the employer or before the Conciliation Officer. As such, I do not consider it necessary to deal with the judgments cited on this point. IN this proceeding, I also do not think there is any scope for examining whether the agreement between the writ petitioner and JIL was a labour contract or not. No such dispute had been raised before the employer or before the Conciliation Officer. As such, I do not consider it necessary to deal with the judgments cited on this point. For the same reason, I do not think I can embark upon an enquiry as to whether it was the writ petitioner or JIL the employer of the respondent no. 5. There is no scope of applying the ratio of the judgment in the case of State of U.P. v. A.N. Singh (supra) in the factual context of the present proceeding. Now turning to the impugned order, it appears to me that the Labour Court has directed addition of the writ petitioner to the proceeding before it as a proper party, and not as a necessary party. This is apparent from the distinction made by the Labour Court between a necessary and a proper party, and its subsequent observation: "It would be just and proper to add the purchaser company in the present case in whose presence an effective final order can be made. I am of further view that to arrive at a complete and final decision on the question involved in the proceeding presence of the purchaser-company 'Glaxo Smithkline Beecham Health Care Ltd.' is necessary." 11. I accept the submission made on behalf of the petitioner that in a case originating from a failure certificate from the Conciliation Officer, if no dispute is raised against a firm or a person by the workman, no relief could be passed against such entity by adding them as a party at the adjudication stage, retaining the entity who has all along been treated as the employer in the same proceeding. That would call for an adjudication of an altogether new point, as to who was the real employer. The scope of power of the conciliation officer under Section 10(1B) of the Act has been examined in the case of C.E.S.C. Ltd. v. State of West Bengal (supra) by this Court and in view of the ratio of the said judgement, such an enquiry by the Labour Court at that stage of the proceeding would be impermissible. The scope of power of the conciliation officer under Section 10(1B) of the Act has been examined in the case of C.E.S.C. Ltd. v. State of West Bengal (supra) by this Court and in view of the ratio of the said judgement, such an enquiry by the Labour Court at that stage of the proceeding would be impermissible. In the present case, as I have already observed, the position of writ petitioner before the Labour Court would be only that of a proper party. In my view, their presence before the Labour Court could not be objected to on the ground that no dispute was raised against them. The power or jurisdiction of the Labour Court under sub-clause 2 of Rule 20(D) is wide enough to order the name of any party to be added to the case. But if the Labour Court contemplates grant of any relief against such party, then in my opinion it would have been necessary to raise dispute at the pre-adjudication stage against such party by the workman as a condition precedent in the factual context of the present case. In this proceeding, I do not think in the given facts, any relief can be granted in favour of the respondent no. 5 against the writ petitioner in case no. 128/2004. The Labour Court being an adjudicating authority, certain latitude has to be given to it to pass an order impleading any person or entity as party before them. Thus, if the Labour Court adds the writ petitioner in the said proceeding as a proper party, which course the Labour Court has taken, no prejudice would be caused to the writ petitioner. 12. ON the question of reasoning, I have considered the ratio of the two authorities cited on behalf of the petitioner. "Balance of convenience", as we understand this expression in legal parlance, cannot be a ground for impleading the writ petitioner as a party to the proceeding and in my view this expression has been used in the order in an inappropriate manner. But the impugned order broadly discloses that the Labour Court felt the necessity of the writ petitioner being present in the proceeding. In these circumstances, I would not like to interfere with the order, since I am of the view that the impugned order has been passed impleading the petitioner as a proper party and not a necessary party. But the impugned order broadly discloses that the Labour Court felt the necessity of the writ petitioner being present in the proceeding. In these circumstances, I would not like to interfere with the order, since I am of the view that the impugned order has been passed impleading the petitioner as a proper party and not a necessary party. This being the position, in my opinion no prejudice would be caused to the writ petitioner if they are added to the proceeding as proper party. Under these circumstances, and with the above observations, the present writ petition shall stand disposed of. Interim orders passed in this order shall stand dissolved. The application, being CAN 1292 of 2008 also stands disposed of in the above terms. 13. URGENT Photostat certified copy of this order be given to the learned advocates for the parties, if applied for, with necessary formalities as expeditiously as possible. Later: Prayer is made for stay of operation of the judgment. The same is considered and rejected.