Karnataka High Court
Bharat Electronics Limited vs B.E.L. Head Office Staff Association ... on 7 March, 2000
Equivalent citations: [2000(85)FLR364], ILR2000KAR1002, 2001(3)KARLJ201, (2000)IILLJ1042KANT
Author: H.L. Dattu
Bench: H.L. Dattu
ORDER H.L. Dattu, J.
1. The petitioner is a Company incorporated under the provisions of Companies Act. It is functioning under the control of Ministry of Defence, Government of India. The Company at present has nine production units, besides a number of Regional Offices spread across the country in different States. Seven of these units have Standing Orders certified under the provisions of the Industrial Employment (Standing Orders) Act, 1946. In respect of the other two units, final certification is pending on appeal before the Appellate Authority. The Company has its Head Office at No. 116/2, Trade Centre, Race Course Road, Bangalore City. The production unit is nearly about 10 kms., away from the Head Office. In the petition, it is stated that the main function of the Head Office is to lay down broad policies and corporate directions to the various units, which is purely of administrative nature. It is specifically stated that no production activity or manufacturing process as such being carried on at the Head Office. The Head Office is registered under the provisions of Karnataka Shops and Commercial Establishments Act, 1961.
2. Petitioner-Company asserts that its Head Office is neither a 'factory', as defined in the Factories Act, 1948, nor an industrial establishment as defined under the provisions of the Industrial Employment (Standing Orders) Act, 1946, and therefore, Head Office has not made any attempts to frame and get the Standing Orders certified under the provisions of the Act for application to the staff at the Head Office.
3. B.E.L. Head Office Staff Association is the registered Trade Union functioning at the Head Office. The Union by its letter dated 18-5-1987 addressed to the Certifying Officer and the Regional Labour Commissioner (Central), Bangalore, sought an amendment to the Standing Orders of the Head Office seeking to incorporate a clause for providing for enhanced annual leave. On receipt of such request, the Certifying Officer has notified the same to the petitioner-Company, which in turn has filed its objections opposing the request made by the respondent-Trade Union for amendment to the Standing Orders. Apart from others, they had specifically contended that the Act, 1946 is inapplicable to the Head Office and secondly, that the Head Office does not have any Standing Orders, certified under the Act and therefore, the application for amendment was wholly misconceived.
4. The Certifying Officer after affording an opportunity of hearing to both the parties, by his speaking order dated 8-1-1988 has disposed off the request made by the respondent-Union by holding that the certified Standing Orders in force at the petitioner's factory/unit at Jalahalli, Bangalore, are not applicable to the workmen working at the Head Office but the Act is applicable to the Head Office. Having come to that conclusion, the Certifying Officer has directed the petitioner-Company to submit draft Standing Orders in relation to the workmen at the Head Office for certification under the Act.
5. Petitioner-Company, aggrieved by the speaking order of the Certifying Officer has preferred an appeal under Section 6 of the Act within the prescribed time before the Appellate Authority, who in turn by his order dated 8-4-1991 has rejected the appeal but chooses to modify the order made by the Certifying Officer dated 8-1-1988. In this order, the Appellate Authority holds that the Standing Orders as certified by the Certifying Officer and Regional Labour Commissioner, Bangalore, to the factory unit of the petitioner-Company are applicable to the workmen employed in the Head Office of M/s. Bharat Electronics Limited and the management of the petitioner-Company is not required to submit any fresh draft Standing Orders in respect of the employees of the Head Office for certification as directed by the Certifying Officer. It is these orders, which are called in question by the petitioner-Company in this petition filed under Articles 226 and 227 of the Constitution, being aggrieved by the same on several grounds.
6. Sri Viswanath, learned Counsel for petitioner-Company in support of the prayer made in the petition firstly submits that the Head Office of the petitioner-Company is not an industrial establishment as defined in clause (ii) of Section 2 of Payment of Wages Act, a factory as defined in clause (m) of Section 2 of the Factories Act, 1948, a railway as defined in clause (4) of Section 2 of the Indian Railways Act, 1890 or the establishment of a person who, for the purpose of fulfilling a contract with the owner of any industrial establishment, employs workmen. Therefore, the 'Head Office' of the petitioner-Company cannot be brought within the meaning of the expression 'Industrial Establishment' under Section 2(e) of the Act. Therefore, the Industrial Employment (Standing Orders) Act, cannot be and should not be made applicable to the Head Office of the petitioner-Company and therefore, since the Act has no application, the Certifying Officer should not have directed the petitioner-Company to submit the draft Standing Orders in relation to the Head Office for certification under the Act. Secondly, it is submitted that the orders framed by the Appellate Authority is not a speaking order since it has not considered the relevant factors required to be considered under the Act to arrive at the conclusion that the Standing Orders as certified by the Certifying Officer to the petitioner-Company's factory unit situate at Jalahalli which is about 10 kms. away from the Head Office is applicable to the workmen at the Head Office. Thirdly, the learned Counsel submits that the Appellate Authority has not given any reasons to differ from the view expressed by the Certifying Officer in this regard. Lastly, the learned Counsel would submit that the reliance placed by the Certifying Officer on the observations made by this Court in the case of Karnataka Agro Industries Corporation Employees' Association v State of Karnataka and Others , would not assist the respondent-Union in any manner whatsoever. In support of his submission, the learned Counsel does not rely upon any decision of any Superior Court, but entirely relies upon the language employed by the legislature while defining the meaning of the expression "Industrial Establishment" under Section 2(e) of the Act.
7. Sri M.C. Narasimhan, learned Senior Counsel for the respondent-Trade Union justifies the impugned order made by the Appellate Authority dated 8-4-1991 by placing reliance to some of the provisions of the Industrial Establishment (Standing Orders) Act.
8. In the present case, in my view, the primary question that requires to be considered is whether the 'Head Office' of the petitioner-Company is an industrial establishment under Section 2(e) of the Act, whether the Certifying Officer was justified in holding that the Act, 1946 is applicable to the Head Office of Bharat Electronics Limited, Bangalore, and lastly, whether the Appellate Authority was justified in declaring that the Standing Orders as certified by the Certifying Officer and Regional Labour Commissioner (Central), Bangalore, are applicable to the workmen employed in the Head Office of the petitioner-Company.
9. To answer these precise questions, in my opinion, firstly a look at the definition of 'Industrial Establishment' under Section 2(e) of the Act requires to be noticed. It is as under:
"2(e) 'Industrial establishment' means.--(i) an industrial establishment as defined in clause (ii) of Section 2 of the Payment of Wages Act, 1936, or
(ii) a factory as defined in clause (m) of Section 2 of the Factories Act, 1948, or
(iii) a railway as defined in clause (4) of Section 2 of the Indian Railways Act, 1890, or
(iv) the establishment of a person who, for the purpose of fulfilling a contract with the owner of any industrial establishment, employs workmen".
10. The respondent-Trade Union had filed its objections to the stand taken by the management in its letter dated 26-6-1987. Among others, it was its specific case that the 'Head Office' of the petitioner-Company is a 'factory' as defined under Section 2(m) of the Factories Act, 1948.
11. Section 2(m) of the Factories Act defines the meaning of the expression 'Factory', it is as under:
"(m) "Factory" means any premises including the precincts thereof.--(i) whereon ten or more workers are working, or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on with the aid of power, or is ordinarily so carried on, or
(ii) whereon twenty or more workers are working, or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on without the aid of power, or is ordinarily so carried on,--
but does not include a mine subject to the operation of the Mines Act, 1952 (35 of 1952), or a mobile unit belonging to the armed forces of the Union, a railway running shed or a hotel, restaurant or eating place".
12. The analysis of the aforesaid provisions would clearly indicate that to fall within the meaning of the expression 'Factory', there should be a premises including precincts thereof and in that premises there must be 'manufacturing process' is carried on with the help of workmen and with or without the aid of power. The word premises in a generic term means a open land or land with buildings. Precincts means the space enclosed by the walls or other boundaries of a particular place or building and more vaguely, the region lying immediately around a place without distinct reference to any enclosures. The word "manufacturing process" is also defined under the Act and the legislative definition of this expression is the subject-matter of judicial interpretation in a number of cases. The Courts have given a wide meaning to this expression. Therefore, an 'establishment' to fall within the meaning of the expression 'factory', it should satisfy all the requirements envisaged in Section 2(m) of the Factories Act, 1948.
13. This Court in the case of Karnataka Agro Industries Corporation Employees' Association, supra, was pleased to hold that the administrative office of the Corporation is an industrial establishment as defined under Section 2(e) of the Industrial Employment Standing Orders. That was a case where administrative office was attached to the workshop which carried on activities in its different sections like foundry, engine repairs, fabrication, welding, smithy, carpentry etc. and also manufactured agricultural implements, tractors, tractor hoods etc. This Court taking into consideration that the administrative office is attached to the workshop, where manufacturing activity is carried on with the help of workmen and with the aid of power and by applying functional integrality test' was pleased to hold that the administrative office of Agro Industries Corporation is an Industrial Establishment, since it answers the definition of a 'factory'.
14. In Employees' State Insurance Corporation, Madras v S.M. Srira-mulu Naidu, the case related to a studio which was engaged in the production of cinematograph films. A number of buildings constituted this studio. All of them were situated in the same compound. The work of the studio was done by several departments. The studio employed more than 20 persons. On those facts, the Madras High Court held that studio was a factory.
15. At this stage, in my opinion, it would be useful to refer to the observations made by this Court in Karnataka Agro Industries Corpora-
tion Employees' Association's case, supra. The Court was pleased to observe:
"The five workshops of Karnataka Agro Industries Corporation are registered under the Factories Act and they employ more than 100 workmen and they come under the definition of the term Industrial establishment' covered by Industrial Employment Standing Orders Act. Even assuming that the majority of the employees are working in the Head Office, the Corporation will not cease to be an industrial establishment. The very purpose of the Industrial Employment Standing Orders Act is to require the employer to define with sufficient precision the conditions of employment under them. Admittedly, the five workshops which are registered under the Factories Act are covered by the Standing Orders Act. Further, the Head Office is also attached to the workshop which is covered by the Industrial Employment Standing Orders Act. By applying the principle of functional integration, the Court has to determine whether the Head Office is also part of the Industrial Establishment".
(emphasis supplied)
16. The Apex Court in Associated Cement Company Limited v Their Workmen , Workmen of the Straw Board Manufacturing Company Limited v M/s. Straw Board Manufacturing Company Limited, was pleased to observe that the tests of functional integrality, general unity and physical proximity should all be taken into consideration in determining the ultimate question of whether the Head Office of a company or a factory comes within the meaning of 'industrial establishment' under the Act. The Apex Court in Associated Cement Company Limited's case, supra, while explaining this concept was pleased to observe:
"The Industrial Disputes Act not having prescribed any specific tests for determining what is "one establishment" for the purpose of sub-section (iii) of Section 25-E of the Act, such considerations as in the ordinary industrial or business sense determine the unity of an industrial establishment having regard no doubt to the scheme and object of the Act and other relevant provisions of the Mines Act, 1952, or the Factories Act, 1948, must be taken into account. The question of unity or oneness presents difficulties when the industrial establishment consists of parts, units, departments, branches, etc. If it is strictly unitary in the sense of having one location and one unit only, there is little difficulty in saying that it is one establishment. Where, however, the industrial undertaking has parts, branches, departments, units etc., with different locations near or distant, the question arises what tests should be applied for determining what constitutes "one establishment".
It is perhaps impossible to lay down any one test as an absolute and invariable test for all cases. The real purpose of these tests is to find out the true relation between the parts, branches, units etc. If in their true relation they constitute one integrated whole, we say that the establishment is one; if on the contrary they do not constitute one integrated whole, each unit is then a separate unit. How the relation between the units will be judged must depend on the facts proved, having regard to the scheme and object of the statute which gives the rights of unemployment, compensation and also prescribes a disqualification therefor. Thus, in one case, the unity of ownership, management and control may be the important test; in another case functional integrality or general unity may be the important test; and in still another case, the important test may be the unity of employment. Indeed in a large number of cases several tests may fall for consideration at the same time. The difficulty of applying these tests arises because of the complexities of modern industrial organisation; many enterprises may have functional integrality between factories which are separately owned; some may be integrated in part with units or factories having the same ownership and in part with factories or plants which are independently owned. In the midst of all these complexities it may be difficult to discover the real thread of unity. Regard must be had to the provisions of the statute under which the question falls to be considered; if the statute itself says what is one establishment, then there is no difficulty. If the statute does not however say what constitutes one establishment, then the usual tests have to be applied to determine the true relation between the parts, branches, etc., namely, whether they constitute one integrated whole or not. No particular test can be adopted as an absolute test in all cases of this type and the word "establishment" is not to be given the sweeping definition of one organisation of which it is capable but rather is to be construed in the ordinary business or commercial sense.
But the various tests which could be applied to decide such a question would be unity of ownership, unity of management, supervision and control, unity of finance and employment, unity of labour and conditions of service of workmen, functional integrality, general unity of purpose and geographical proximity".
17. In Management of Pratap Press, New Delhi v Secretary, Delhi Press Workers' Union, Delhi, the Supreme Court was pleased to observe:
"The most important test is that of functional integrality meaning thereby such of finance, employment and labour. The Court has to consider how far there is "functional integrality" meaning thereby such functional interdependence that one unit cannot exist conveniently and reasonably without the other and on further ques-
tion whether in the matters of finance and employment, the employer has actually kept the two units distinct or integrated".
18. In Honorary Secretary, South India Millowners' Association v The Secretary, Coimbatore District Textile Workers' Union, the Apex Court on the game topic observed:
"In dealing with problem, several factors are relevant and that it must be remembered that the significance of the several relevant factors would not be the same in each case, nor their importance. Unity of ownership and management and control would be relevant factors. So would be the general unity of the two concerns; the unity of finance may not be irrelevant and geographical location may also be some relevance; functional integrality can also be a relevant and important factor in some cases. It is also possible that in some cases, the test would be whether one concern forms an integral part of another so that the two together constitute one concern and in dealing with this question the nexus of integration in the form of some essential dependence on the one or the other may assume relevance. Unity of purpose or design or even parallel or co-ordinated activity intended to achieve a common object for the purpose of carrying out the business of the one or other can also assume relevance and importance. In the complex and complicated forms which modern industrial enterprise assumes, it would be unreasonable to suggest that any one of the relevant tests is decisive; the importance and significance of the tests would vary according to the facts in each case and so the question must always be determined bearing in mind all the relevant tests and correlating them to the nature of the enterprise with which the Court is concerned".
(emphasis supplied)
19. In Management of Wenger and Company v Their Workmen, the Apex Court was pleased to observe:
"Several factors are relevant in deciding this question (whether industrial establishments owned by the same management constitute separate units or one establishment). But, it is important to bear in mind that the significance or importance of these relevant factors would not be same in each case. Whether or not the units constitute one establishment or really two separate and independent units must be decided on the facts of each case".
20. Keeping in view the broad principles laid down by Supreme Court and this Court, the question that requires to be considered is whether the Head Office of the petitioner-Company is an industrial establishment. Answer to this question primarily depends on the definition of Industrial Establishment as defined in Section 2(e) of the Act and the facts pleaded by respective parties in the lis.
21. Now the question that requires to be considered is whether the Certifying Officer and Regional Labour Commissioner (Central). Bangalore, while arriving at the conclusion that the 'Head Office' of the petitioner-Company is an industrial establishment has applied the tests laid down by this Court and the Apex Court in number of cases and the other question is, was he justified in declaring that the Standing Orders of the factory unit situate at Jalahalli, Bangalore, would not apply to the employees-workmen in the Head Office.
22. Before the Certifying Officer, it was the specific case of the Management of the petitioner-Company while opposing the application filed by the respondent-Trade Union dated 18-5-1987, inter alia seeking modification to the existing'certified Standing Order's of the Bharat Electronics Limited that the Industrial Employment (Standing Orders) Act would apply only to 'industrial establishment' as defined in the Act and the same will not apply to 'Head Office', since it is not an establishment as defined in clause (ii) of Section 2 of the Payment of Wages Act nor an establishment of a person, who for the purpose of fulfilling a contract with the owner of any industrial establishment, employs workmen.
23. The respondent-Trade Union had filed its objections to the stand taken by the management of the petitioner-Company in its letter dated 26-6-1987 and in that, it was contended that the certified Standing Orders of B.E.L., Bangalore, defined the expression 'Manager' to mean Managing Director, whose office is Head Office and therefore, the 'Head Office' is governed by the certified Standing Orders of the Bangalore Unit of the petitioner-Company. All the office orders pertain to B.E.L., Bangalore Unit are applicable to Head Office including promotion policy, service conditions, etc. and the Head Office is the premises of the factory, where planning and production of activities are being earned out. Therefore, the Head Office is a factory as defined under Section 2(m)of the Factories Act.
24. The Certifying Officer with the available pleadings on record for deciding the lis between the parties had rightly raised an issue namely, whether the provisions of the Industrial Employment (Standing Orders) Act is applicable to Head Office of B.E.L.. Bangalore, but for answering the issue merely relies upon the observations made by this Court in the case of Karnataka Agro Industries Corporation Employees' Association and holds that the Head Office of B.E.L., Bangalore, is covered under the Act. The thinking of the Certifying Officer which is reflected in the impugned order is as under:
"From the above decision, it is very clear that the Head Office of B.E.L. is covered by the Act. It is also clear from the statement of Management that no Standing Orders has been certified in respect of the Head Office so far. The Standing Orders of the other units of the company are not made applicable to the Head Office. Therefore, the question of amendment to the Standing Orders as suggested by the Union, does not arise".
25. Except this there is nothing else in the order made by the Certifying Officer and in my opinion, there is no improvement in the order made by the Appellate Authority in the appeal filed by the petitioner-Company against the order made by the Certifying Officer. In fact, he proceeds on a wrong assumption that the Head Office is situate in the precincts of the factory and controls the various aspects of the factory's working. The findings of the Appellate Authority on this aspect of the matter is as under:
"I find that the Head Office is situated in the precincts of the factory and controls the various aspects of the factory's working. The service conditions of the staff working in the Factory Office and Head Office are same. There is no differentiation between them in the matter of appointment, staff number, seniority, promotion, gradation, etc. All of them avail same leave facilities and other privileges without any variation. Every staff is issued an appointment in the Company, The terms and conditions of the appointment are enumerated in the Annexure to the appointment order given to the staff. In Clause 13 of the said Annexure, it has been clearly mentioned that during the employment, the staff will be governed by the rules, regulations of service and Standing Orders/rules of the Company now in force and which may be amended, altered or extended from time to time. The Management is also taking disciplinary action against the Head Office staff under the Standing Orders. Further no separate rules, regulations, or service directions in respect of Head Office staff could be produced by the Management".
25-A. In my opinion, the Certifying Officer and Regional Labour Commissioner, before holding that the 'Head Office' of the B.E.L., Bangalore, is covered under the Act, should have applied the tests laid down by the Apex Court in Associated Cement Company Limited's case, supra and other subsequent decisions and without doing so, could not have come to the conclusion that the Head Office of the petitioner-Company is also covered under the Industrial Employment (Standing Orders) Act, by merely relying upon the observations made by this Court in Karnataka Agro Industries Corporation Employees' Association's case, supra, without even finding out whether the factual matrix in the said decision is the same as in the instant case. As observed by the Supreme Court in Associated Cement Company Limited's case, supra, that "it is perhaps impossible to lay down any one test as an absolute and invariable test for all cases. The real purpose of those tests is to find out the true relation between the parts, branches, units etc., if in their true relation they constitute one integrated whole. We say that the establishment is one, if on the contrary they do not constitute one integrated whole, each unit in them a separate unit. How the relations between the units will be judged must depend on the facts proved. . . .".
26. In my view, this particular issue is a mixed question of facts and law and the issue at the first instance requires to be considered by the Certifying Officer by taking into consideration the facts pleaded and proved and if necessary by directing the parties to produce both oral and documentary evidence in support of their case. In the absence of proper factual foundation, it may not be proper for this Court to assume certain things to decide the important issue involved in this case. This aspect of the matter should have been noticed and appreciated by the Appellate Authority and without doing so, and on assumption that the Head Office of the petitioner-Company is situate in the precincts of the factory proceeds to hold that the Standing Orders certified by the Certifying Officer to the petitioner-factory unit is applicable to the workmen employed in the Head Office. Therefore, even this order made by the Appellate Authority requires to be set aside.
27. Lastly, the orders made by the respondent-authorities do not contain any reasons whatsoever. The requirement of a speaking order is a part and parcel of the concept of natural justice. A speaking order is one which contains reasons for the decision and conclusion. Such reasons cannot be supplied by other documents or evidence. The order must speak for itself. A conclusion running into one or two sentences cannot be equated with reasons which are required to be recorded by the quasi-judicial authority. In the instant case, both the authorities without recording reasons much less proper reasons have proceeded to decide an important issue and therefore, the same cannot be sustained.
28. For the reasons stated, I have no other alternative before me except to remand the case to the Certifying Officer and Regional Labour Commissioner (Central), Bangalore, for re-examining the issue raised by the parties to the lis and decide the same afresh on merits, keeping in view the observations made by this Court in the course of this order. The parties are at liberty to produce such other materials and documents which are available with them in support of their case before the Certifying Officer. All the other contentions of both the parties are left open.
Ordered accordingly.