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2012 DIGILAW 799 (KER)

FACT Employees Association v. Labour Court

2012-08-21

S.SIRI JAGAN

body2012
JUDGMENT : In these two writ petitions, the petitioners are unions of workmen of the Fertilisers and Chemicals, Travancore Limited (FACT Ltd. for short). They are challenging the awards in I.D. Nos.10/2004 & 4/2005 of the Labour Court, Ernakulam, wherein they were the management. Ext.P18 in W.P. (C) No.33938/2008 is the award in I.D. No.10/2004 and Ext.P12 in the other writ petition is the award in I.D. No.4/2005. The issues referred for adjudication in both I.D.s are more or less identical although the wordings of the reference orders vary. Therefore, these writ petitions are heard together and are disposed of by this common judgment. 2. The issue referred for adjudication in I.D.No.10/2004 is "whether the action of the management of FACT, Ltd. Udyogamandal in having reduced the age of superannuation of pre-1978 workers from 60 years to 58 years is justifiable or not? If not, what relief the workmen are entitled to?" The issue referred for adjudication in I.D. No.4/2005 is "whether the action of the management of FACT Ltd. Udyogamandal Ltd. terminating the service of 42 workmen is justifiable or not? If not, what relief the workmen are entitled to?" In both disputes, the action of the management which gave rise to the two I.Ds is the same viz. the retirement age of the workmen in both I.Ds was reduced from 60 years to 58 years, consequent to which they were terminated from service as superannuated. The facts necessary for disposal of these writ petitions may be summarised below 3 On 23.01.1978, the unions and the management of the Udyogamandal Division of FACT Limited entered into a long term settlement as per which the management and unions agreed to retain the retirement age of all workers who were in service as on 23.01.1978 as 60 years and to reduce the retirement age of workmen who enters service thereafter as 58 years. A similar settlement was entered into on 16.08.1978 in respect of workmen of Kochi Division as per which workmen who were on the rolls of the company as on 23.01.1978 were allowed to have their retirement age as 60 years and others as 58 years. On 27.5.1998, the Government of India instructed the management to enhance the retirement age of all workmen to 60 years. On 27.5.1998, the Government of India instructed the management to enhance the retirement age of all workmen to 60 years. But later, on 11.7.2001, by Ext.P1 in W.P.(C) No.2556/2009, the retirement age of employees other than those who were in service as on 23.1.1978 was rolled back to 58 years. Pursuant thereto, by Ext.P2 in that writ petition the company implemented the same. Consequently amendments were made to the standing orders by Ext.P3 order of the authority under the Industrial Employment (Standing Orders) Act, 1946. While so, the company declared a voluntary retirement scheme. Although the workmen involved in these writ petitions applied for voluntary retirement as per a Voluntary Retirement Scheme declared by the management, they were not allowed to retire voluntarily pursuant to the Voluntary Retirement Scheme. But suddenly the management took a decision to roll back the retirement age of pre-1978 employees also to 58 years. The Government of India, by Ext.P5 (in W.P.(C) No.2556/2009) communication accorded approval for the said decision of the management, but with the condition that the FACT management will fulfill legal requirements, if any, while implementing the decision. But it appears that subsequently the Government of India withdrew the said condition of fulfilling legal requirements while implementing the decision. By Ext.P6 (in W.P.(C) No.2556/2009) dated 29.04.2003, that decision was put into effect and therefore all those persons who had already attained age of 58 years were summarily terminated from service on superannuation. The workmen challenged the said decision by filing O.P. Nos. 14598, 14599 & 14976/2003. By Ext.P7 judgment, a learned single Judge of this Court refused to interfere with the order of the management in reducing the retirement age of pre-1978 employees also to 58 years, but held that it shall be open to the petitioners to work out their other remedies available under law. The workmen challenged the judgment by filing writ appeal Nos.1565, 1595, 2112 & 2113/2003. By Ext.P8 judgment, a Division Bench of this Court upheld the judgment of the learned single Judge. Thereafter, the workmen challenged the decision of the Division Bench by filing SLP before the Hon'ble Supreme Court, which was also dismissed. Thereafter, the workmen raised the above disputes which were referred for adjudication before the Labour Court, Ernakulam. In the industrial disputes, the Labour Court raised the following points for consideration: "1.Whether the reference made by the State Government is legal and valid? 2. Thereafter, the workmen raised the above disputes which were referred for adjudication before the Labour Court, Ernakulam. In the industrial disputes, the Labour Court raised the following points for consideration: "1.Whether the reference made by the State Government is legal and valid? 2. Whether the reference is barred by resjudicata? 3. Whether the action of the management of FACT Ltd., Udyogamandal terminating the service of 42 workmen is justifiable? 4. If not, what relief the workmen are entitled to? "On the first issue, the Labour Court found that the reference is maintainable. On the 2nd issue, the Labour Court found that the reference is barred by resjudicata in view of the decision of the Single Bench and Division Bench of this Court referred to above. Thereafter, the Labour Court went on to consider whether the action of the management is justifiable and held that the same is justifiable. Separate but identical awards have been passed in the two I.Ds, which are under challenge in these writ petitions. 4. The contention of the workmen is that on point Nos.2, 3 & 4 the decision of the Labour Court is clearly perverse. According to them, the Single Bench and Division Bench of this Court in Exts.P7 & P8 judgments did not actually consider the issues involved on merits. They have simply refused to entertain the writ petitions under Article 226 of the Constitution of India, relegating the parties to the remedy by way of raising an industrial disputes in respect of the same subject matter. Therefore, the decision of the Labour Court that the reference is barred by resjudicata is clearly perverse. 5. Regarding the 2nd point they would contend that the settlements entered into between the unions and management contained a clause to the effect that the retirement age of all workmen in service as on 23.1.1978 would be 60 years. Those settlements have not been terminated by resort to proceedings prescribed under law. As long as those settlements are in force, the management has no manner of legal right to retire the petitioners from service on attaining 58 years of age, on a unilateral decision to reduce the retirement age to 58 years from 60 years. Those settlements have not been terminated by resort to proceedings prescribed under law. As long as those settlements are in force, the management has no manner of legal right to retire the petitioners from service on attaining 58 years of age, on a unilateral decision to reduce the retirement age to 58 years from 60 years. According to them, the Labour Court misdirected herself by considering whether the financial condition of the management warranted lowering of the retirement age and on a perverse finding that the financial condition of the management warranted lowering of the retirement age, held that the action of the management is justifiable. The petitioners would contend that no law permitted denial of rights of workmen by the Labour Court merely on the ground of financial condition of the management. They would further submit that even assuming that the management was in a financial crisis warranting reduction manpower, the remedy available to the management was either to retrench the workmen in accordance with the provisions of the Industrial Disputes Act, in which case the principle to be adopted should have been 'last come first go' instead of which they have adopted a policy of superannuating employees who came first which cannot be countenanced in law or they could have resorted to the procedure prescribed under Section 9A of the Industrial Disputes Act, which also they have not resorted to. From these contentions, the petitioners would submit that the awards are totally unsustainable in law and are liable to be set aside. 6. The counsel for the management would stoutly support the impugned awards. According to him, insofar as the issue referred for adjudication is the justifiability of the action taken by the management, the Labour Court has rightly considered the question and found that the action is justifiable. He would point out that as is evidenced from Ext.P2 request of the unions themselves and Clause 23 of Ext.P10 (in W.P. (C) No.33938/2008) settlement, the unions also were of the firm opinion that without reduction of workforce it was not possible for the company to survive the financial crisis, which the company was in. They point out that this situation has been endorsed by the learned Single Judge and Division Bench in Exts.P7 & P8 judgments, which were confirmed by the Hon'ble Supreme Court also. They point out that this situation has been endorsed by the learned Single Judge and Division Bench in Exts.P7 & P8 judgments, which were confirmed by the Hon'ble Supreme Court also. The counsel would particularly refer to paragraph 8 of Ext.P8 judgment of the Division Bench wherein the Division Bench held that in the interest of 5781 other employees of the company, the reduction of age of superannuation of the other 682 employees was justifiable. 7. It is further submitted by the counsel for the respondents that the violation of the settlement was never an issue referred for adjudication and therefore that question could not have been considered by the Labour Court. He also refers to the definition of Industrial Dispute in Section 2 (k) of the Industrial Disputes Act, in support of that contention. 8. I have considered the rival contentions in detail. 9. At the outset I must hold that the decision of the Labour Court on the second issue as to whether the reference was barred by resjudicata was clearly unsustainable. I am of opinion that while passing Exts.P7 & P8 judgments, the learned Single Judge and Division Bench of this Court was essentially considering the question as to whether in the peculiar facts and circumstances of the case, this Court should exercise the discretionary jurisdiction under Article 226 of the Constitution of India. The judgments, particularly the Division Bench decision, points to the fact that this Court was moved by the financial crisis of the company effecting 5781 employees and their families in denying jurisdiction. But what has been decided in those judgements is essentially that this Court is not inclined to exercise its discretionary jurisdiction under Article 226 of the Constitution of India to interfere with the orders of the management, relegating the parties to other remedies available under law. In fact in Ext.P7 judgment, in the operative portion, while dismissing the original petitions the learned Judge specifically stated that "it shall be open to the petitioners to work out their other remedies available by law". In Ext.P8 judgment in paragraph No.9 the Division Bench held that "taking the totality of the circumstances into consideration and without expressing any final opinion on the issue, we find that the view taken by the learned Single Judge is just and fair". In Ext.P8 judgment in paragraph No.9 the Division Bench held that "taking the totality of the circumstances into consideration and without expressing any final opinion on the issue, we find that the view taken by the learned Single Judge is just and fair". In fact the Division Bench of this Court themselves granted leave to appeal to file appeal against Ext.P8 judgment, before the Supreme Court. Therefore, I am unable to persuade myself to accept the finding of the Labour Court that the reference is barred by resjudicata in view of Exts.P7 & P8 judgments. That finding of the Labour Court is clearly against law and unsustainable. 10. The next question is as to whether the further finding of the Labour Court that the action of the management in reducing the age of superannuation of the workmen to 58 years from 60 years was justifiable is correct or not. I find that Labour Court was also thinking in the same lines as this Court in Exts.P7 & P8 judgments. The thinking was as to whether it is in the interest of the survival of the company itself to interfere with the decision of the management in reducing the age of superannuation of these workmen. Perhaps if I had a discretion to decide so, as was done in Exts.P7 & P8 judgments, I would also have taken the same view since the lives of 5781 other employees and their families were at stake whereas the workmen involved in the I.Ds were at the fag end of their career with the company. But unfortunately, I don't have that discretion while dealing with the question of sustainability of awards in industrial disputes. I do not think that I can decide that question on the basis of public interest or even in the interest of survival of the company. I have to essentially decide the question as to whether the reduction in retirement age of the petitioners from 60 to 58 years is legally valid or not. 11. Of course, the learned counsel for the respondents would vehemently argue that the question of violation of the settlement was not an issue at all in the industrial disputes. But the question of validity of the termination of service of the workmen on reduction of retirement age was certainly an issue. 11. Of course, the learned counsel for the respondents would vehemently argue that the question of violation of the settlement was not an issue at all in the industrial disputes. But the question of validity of the termination of service of the workmen on reduction of retirement age was certainly an issue. The decision on that issue would essentially revolve round the question of violation of the settlement itself. The fact that the settlement was in force at the time when the disputes arose cannot be disputed by the respondents. Therefore, the applicability of that settlement to the issues involved in the I.D.s was certainly to be considered by the Labour Court. Therefore, simply because the issue referred for adjudication was not the violation of the settlement, it cannot be said that the applicability of the settlement cannot be considered in the matter of considering the issues referred for adjudication. 12. When the question of termination of service of the workmen or the reduction in retirement age of the workmen are under consideration the question as to whether in view of the settlement the management could terminate the services of the workmen by reducing the retirement age to 58 years from 60 years has to be considered. As I have already held, even as on this date the settlements continue to be in force. It has not been terminated by a process known to law. Therefore, the retirement age of the workmen who were in the rolls of the company as on 23.1.1978 has to be only in accordance with the settlement, as per which their retirement age continued to be 60 years. The management could not have unilaterally, even with the approval of the Government of India, taken a decision to reduce that retirement age to 58 years, which is clearly unsustainable in law. 13. It is not as if the management had no other course open to them, if they wanted to reduce the work force. They could have certainly resorted to retrenchment under the Industrial Disputes Act. But the counsel for the management points out that in the particular fact situation, that was not a course open to the management. The establishment is one to which Section 25 N of the Industrial Disputes Act was applicable. Therefore, they could not have retrenched workmen without prior sanction from the Government. But the counsel for the management points out that in the particular fact situation, that was not a course open to the management. The establishment is one to which Section 25 N of the Industrial Disputes Act was applicable. Therefore, they could not have retrenched workmen without prior sanction from the Government. The management would point out that even for laying off some workmen the Government did not grant the management prior sanction. Therefore, if they approached the Government for sanction to retrench workmen, the same fate would have resulted. The counsel for the management would point out that taking action under Section 9 A of the Industrial Disputes Act would not have solved the problems of the management. If a notice under Section 9 A was given and the unions did not agree to the reduction in retirement age, naturally the result would be an industrial dispute, pending which the management would not be able to implement the decision to reduce the retirement age. In view of the provisions of the Industrial Disputes Act, I am of opinion that even those practical difficulties cannot save the situation for the management, insofar as the unilateral decision to reduce the retirement age from 60 to 58 years is contrary to the settlements between the management and the unions which are binding on both, is clearly illegal and unsustainable. For that reason, the impugned awards are clearly unsustainable to that extent. They are therefore quashed to that extent. 14. Insofar as no disputed questions of facts are involved, I do not find it worthwhile to remand the matter to the Labour Court for re-adjudication, since it will not serve any useful purpose either for the management or for the workmen. 15. The next question is as to what should be the relief to be granted to the workmen on the above findings. The fact that the management resorted to the action impugned in the industrial disputes only because of circumstances beyond their control is clearly endorsed by this Court in Ext.P8 judgment. This court found that it was in the interest of the other workers constituting 90% of the total workforce of the company that the 10% workmen involved in these writ petitions have been superannuated from service. This court found that it was in the interest of the other workers constituting 90% of the total workforce of the company that the 10% workmen involved in these writ petitions have been superannuated from service. In fact, the fact that the unions were also aware of the necessity to reduce the workforce is clear from Exts.P2 & P10 produced in W.P. (C) No.33938/2008. In Ext.P2, all the unions of employees of the management acknowledged the fact that the organization is in a crisis and in order to save the great organisation the unions themselves requested the management to review the decision taken to enhance the retirement age to 60 years so that a substantial amount can be saved. In Ext.P10 settlement between the management and unions the unions themselves acknowledged the necessity to reduce the manpower by incorporating Clause 23 thereof which reads thus: "23. Manpower reduction It is agreed between the parties that the manpower strength in the Non-Managerial categories in the Company will be brought down to ensure reduction in strength by at least 20% of the overall sanctioned strength as on 1.1.1997, with a view to improving productivity and performance of the Company and for generating internal resources. It is also agreed that the details of the consequent reduction in strength in the non-managerial categories in the various Departments of each Division will be discussed and finalised at the Divisional level as early as possible and in any case not later than 20.9.2001. It is also agreed that the report of the study on "Organisational Analysis and Restructuring of Manpower", conducted by the NPC, will be implemented on a mutually agreed basis." From the above facts, it is clear that while granting reliefs to the workmen involved, this Court should also keep in mind the above stark realities. Of course, although not because of any fault of theirs, the workmen did not work. Since it was to save the Company from complete disaster that the management resorted to unilateral action of reducing the retirement age, I am of opinion that in the public interest, part of the burden should be borne by the workmen also. Of course, although not because of any fault of theirs, the workmen did not work. Since it was to save the Company from complete disaster that the management resorted to unilateral action of reducing the retirement age, I am of opinion that in the public interest, part of the burden should be borne by the workmen also. Taking into all these facts, I am of opinion that justice would be met, if the management pays 30% of the wages, which would have been payable to the petitioners in these two writ petitions, had they continued till the age of 60 years as compensation to the workmen. That amount shall be computed and paid to the petitioners, as expeditiously as possible, at any rate, within six months from the date of receipt of a copy of this judgment. These writ petitions are disposed of as above.