Madras High Court
Madura Sugars Staff Union And Ors. vs Madura Sugar Mills Rep. By Its Chief ... on 20 October, 2004
ORDER K.P. Sivasubramaniam, J.
1. The petitioner is the Secretary of the Madura Sugars Staff Union registered under the Trade Unions Act, 1956. He has prayed for a writ of Mandamus to direct the respondent to pay 50% of the wages as layoff compensation under Section 25-C of the Industrial Disputes Act to seasonal workmen of the respondent for the period of layoff commencing from 29.11.2002.
2. The petitioner contends that the respondent is a Sugar Mill owned by the Tamil Nadu Government. When it was established in the year 1949, it was a private mill and subsequently taken over by the Government in 1983. The reason for the take over itself was that the private mill failed to pay the dues payable to the farmers who supplied sugarcane and non-payment of electricity charges and that the amount recovered from the farmers towards repayment of crop loan was not remitted to the banks. The petitioner further submits that at the time of take over, the mill had the crushing capacity of 800 tonnes per day and had employed 701 workmen, both regular and seasonal. After the take over, the crushing capacity was increased to 1250 tonnes. However, during 1995, the work force was reduced to 556 from 701, instead of increasing the work force, and subsequently, further reduced to 351. According to the petitioner, out of 351 workmen, 150 are regular and 201 are seasonal workmen. The seasonal workmen comprised of 37 clerks, 13 skilled, 128 unskilled and 23 semi-skilled workmen. During the crushing period, both regular and seasonal workmen are employed and they are paid wages and further, during non-crushing period, the seasonal workmen are paid retaining allowance, which is in the nature of subsistence allowance, as provided under the agreement between parties. The petitioner further submits that after the crushing period during the year 2001-2002 was over in April, the seasonal workmen were paid retaining allowance for the non-crushing period. They were not called for maintenance work, and in fact, no maintenance work was done during the non-crushing period. Crushing did not commence in October, 2002, for the crushing year 2002-2003. Instead, the respondent sought permission from the Tamil Nadu Government under Section 25-M of the Industrial Disputes Act to layoff 310 workmen, namely, to layoff 109 regular workmen and 201 seasonal workmen. The application was opposed by the Unions. However, the Tamil Nadu Government, in G.O.No.1038, Labour and Employment dated 29.11.2002, granted permission for a period of six months from 29.11.2002 and hence, the petitioner proposed to challenge the order of the Government.
3. The petitioner further submits that after the layoff commenced, the regular workmen were paid 50% of the wages as layoff compensation, but the seasonal workmen are being paid only 50% of the retaining allowance for the layoff period. According to the petitioner, the seasonal workmen are also entitled to layoff compensation as payable to regular workmen, as provided under Section 25-C of the Industrial Disputes Act, as they are also "workmen" under Section 2(s) of the Industrial Disputes Act. There is no reason for reducing the retaining allowance by 50%, since the non-crushing period continues for the seasonal workmen in view of the layoff declared for the crushing period and therefore, the layoff would not make any difference in the case of seasonal workmen.
4. In the counter affidavit filed by the Chief Executive of the Mill, the respondent contends that the provisions of the Industrial Disputes Act are exhaustive and recourse must be had to the forum created under that Act and therefore, the writ petition was not maintainable. The contention that seasonal workmen, during non-crushing period, would be entitled to full retaining allowance was not correct. The respondent-mill was incurring heavy loss to the tune of 22.39 crores as accumulated loss as on 31.3.2002. Hence, the mill applied for layoff under Section 25-M of the Industrial Disputes Act. The mill was not obliged to seek permission for layoff for the seasonal workmen, as they were not entitled to any rights if the mill stops functioning. It is only by way of abundant caution, layoff application was made in respect of seasonal workmen also. The crushing ended in April, 2002, and it would normally re-commence by December, 2002. However, due to the non-availability of cane to the required capacity, the mill was not able to re-commence its functioning. In such circumstances, there was no possibility for calling the seasonal workmen for duty and therefore, they will be entitled only to the retaining allowance. By claiming compensation for the layoff, the seasonal workmen are trying to get a better rate than what they would have got during the non-crushing period. They would get the retaining allowance in accordance with the settlement only when the mill was functioning. Section 25-C would not apply to a seasonal establishment.
5. Mr.D.Hariparanthaman, learned counsel for the petitioner Union, contends that while 109 permanent workmen are paid 50% of their salary as layoff compensation, the said benefit was being denied to the seasonal workmen. The real fact is that though they are classified as seasonal workmen, the functioning of the mill was practically impossible without utilising their services. It is only in recognition of the indispensability of the services of the seasonal workmen, in the settlement arrived at between the various Unions and the public sector sugar factories, it was specifically stipulated that even during the non-crushing period, the seasonal workmen would be entitled to receive 50% of the wages. Even during the non-crushing period, their services were being utilised for maintenance works. Learned counsel contends that the entitlement to receive 50% of the wages during non-crushing period was actually in the nature of subsistence allowance during the said period. Therefore, there can be no further reduction of the minimum allowances which were being paid and any further reduction would result in paying the workers only a paltry sum, which will not be sufficient for their sustenance. Therefore, even during the non-crushing period, they would be entitled to receive 50% of the wages. Learned counsel also referred to the various provisions under the Industrial Disputes Act, especially, in the context of the rules relating to seasonal employees with specific reference to Sections 2(rr), 25-A, 25-J and 25M of the Industrial Disputes Act.
6. Learned counsel further contends that the submission of the Management that it is only a seasonal industry cannot be sustained, in view of their own conduct of having sought for permission under Section 25-M for layoff of the workmen. Whether an individual establishment was seasonal or not cannot be concluded merely by the nature of the industry, namely, a sugar factory or a textile mill etc., but it would depend upon the facts and circumstances of each case. The conduct of the Management itself in having gone before the Government under Section 25-M and the grant of such permission by the Government was conclusive of the fact that the provisions of the Industrial Disputes Act were applicable and the petitioners were entitled to be treated as regular employees. In support of his contention that the sugar factory cannot be termed as a "Seasonal establishment", reliance is placed on the following two judgments:
(i) JAGGIVAN BHIMJI VAJA V. UNION OF INDIA & OTHERS (1996 (I) LLJ 629) (Division Bench of Gujarat High Court); and
(ii) SPECIAL OFFICER & JT. REGISTRAR, COOPERATIVE SOCIETIES, V. WORKMEN VANIVILAS COOPERATIVE SUGAR FACTORY (1996 (II) LLJ 423) (Division Bench of Karnataka High Court).
7. In SIRUGUPPA SUGARS AND CHEMICALS LTD. V. COMMISSIONER OF LABOUR, GOVERNMENT OF KARNATAKA & others (2002 (3) LLN 465), a single Judge of the Karnataka High Court held that when once the Court had declared the sugar factory as not an establishment of seasonal character and issued a certificate to the said effect and the same having also been confirmed by this Court, it was not open to the Management now to contend that the sugar factory was a seasonal establishment.
8. Likewise, in MANAGEMENT OF STANMORE ESTATE V. STATE OF TAMIL NADU & OTHERS (1999 (3) LLN 336), a learned single Judge of this Court held that the decision of the State Government rejecting the claim of the petitioner/Coffee Estate to declare the Coffee Estate as a seasonal industry cannot be lightly interfered with by the High Court, when the decision of the Government was arrived at on acceptable materials and not pleaded to be mala fide. Learned counsel relies on this judgment in support of his contention that when once the Government had treated the establishment as falling under Section 25-M of the Act, it was not open to the respondents to contend that the establishment was seasonal in character.
9. Learned counsel also refers to the agreement executed between the Unions and the respondent and relies on Clause 11.0 dealing with retaining allowance during the non-crushing period.
10. Mr.Vijay Narayan, learned senior counsel appearing for the Management, contends that in a series of judgments, the Supreme Court had held that the sugar factories are seasonal establishments and hence, the said issue, being a concluded one, the petitioners cannot be heard to canvass that the respondent was not a seasonal industry. It therefore follows that the employees, more so the petitioners, who are admittedly seasonal workmen, cannot seek to claim any right to be either regularised in service or for retrenchment compensation or for layoff compensation, which are payable only to the permanent employees in a regular non-seasonal establishment. The fact that the respondent- Management had gone before the Government under Section 25-M cannot result in an estoppel against the establishment, as it would mean estoppel against the statute. That was done only by way of abundant caution and the said fact alone cannot clothe the petitioners with any better right than what they are actually entitled to in law. It is true, in terms of the agreement, that during non-crushing period, they would be entitled to 50% of the salary. But, now that the factory is closed, they will not be entitled to any payment, as they are not in the rolls of the establishment. But the liability to pay in terms of the order of the Government under Section 25-M, would be referable only to permanent employees. As the petitioners are entitled to only retaining allowance during non-crushing period, they will be entitled to only 50% of the retaining allowance during the entire layoff period. As the mill was not functioning after the year 2002, there was no scope for the seasonal workmen to be called for any work. The attempt on the part of the seasonal workers in this writ petition is to get a better rate than the permanent employees themselves. The following judgments are relied on to support the contention that the sugar factory is a seasonal establishment:
(i) MORINDA COOPERATIVE SUGAR MILLS LTD V. WORKERS R.KISHAN & OTHERS (1995 (II) LLN 1129 (SC));
(ii) ANIL BAPURAO KANASE V. KRISHNA SAHAKARI SAKHAR KARKHANA LTD. & ANOTHER (1997 (3) LLN 67 (SC));
(iii) PERAMBALUR SUGAR MILLS EMPLOYEES UNION V. PERAMBALUR SUGAR MILLS AND ANOTHER (2002 (2) LLN 345) (Division Bench, Madras High Court).
11. Learned counsel further contends that the petitioners are seeking to enforce their alleged rights under the provisions of the Industrial Disputes Act. The issues which are raised by them include the question as to whether the respondent-establishment was seasonal or not. Such issues would depend upon the consideration of the evidence and the factual details. Hence, it is only the appropriate forum under the Industrial Disputes Act which would be the appropriate authority to adjudicate the said issues, which cannot be canvassed in a writ petition. In support of his contention that the established practice under such circumstances was non-interference under Article 226 of the Constitution of India, learned counsel relies on the judgment of the Supreme Court in U.P. STATE BRIDGE CORPORATION LTD. AND OTHERS V. U.P. RAJYA SETU NIGAM S.KARAMCHARI SANGH .
12. I have heard both parties.
13. The issue of alternative remedy may be dealt with first. As discussed below, the relief which is claimed by the petitioner is capable of decision on a bare interpretation of the agreement executed between the Union and the Management under Section 18(1), which is, undoubtedly and admittedly, binding on both the parties. No further controversial or factual issues would arise for consideration so as to drive the parties before the forum under the Industrial Disputes Act. Alternative remedy is not a bar for relief under Article 226, if the issue can be decided on the available and admitted facts.
14. For the same reason, namely, that the rights of parties are supervened by an agreement under Section 18 of the Industrial Disputes Act, it is equally unnecessary to go into the issue as to whether the respondent establishment is a seasonal industry or not. An agreement which is entered into under Section 18 of the Act is binding on the parties to the agreement and the relief in this writ petition is based purely on the interpretation of the said agreement. Therefore, it is not necessary to go into the issue as to whether the respondent establishment is a seasonal establishment or not.
15. A Memorandum of Settlement had been earlier entered into between the various unions, representing all the workmen in all the cooperative public and private sector sugar mills and the Managements of those mills, by a settlement dated 29.4.1994. The same was subsequently renewed on 29.7.1999. The settlement was entered into under Section 18(1) of the Industrial Disputes Act read with Rule 25 of the Tamil Nadu Industrial Disputes Rules, 1958. There is no dispute over the fact that the agreement continues to be operative as on date.
16. It is further pertinent to note that the order under Section 25-M came to be passed by the Government in G.O.(D) No.1038, Labour and Employment Department dated 29.11.2002, only after the respondent themselves had taken out an application and after notice to all the registered Unions. The Unions were also heard. The order of the Government was passed only after hearing the Chief Executive Officer of the Mill and the representatives of seven Unions. In fact, in the application itself, it is very clear that the Mill had applied to layoff all the 310 workmen, which includes seasonal workmen. Therefore, it is not open to the Management to contend that the petitioners/workers are not entitled to enforce any rights as would arise under Section 25-M and also independently in terms of the settlement under Section 18.
17. The term of agreement relating to the retaining allowance payable to the seasonal employees during the non-crushing period, is governed by Clause 11.0, which reads as follows:
" 11.0 RETAINING ALLOWANCE 11.1 Both parties agree that the retaining allowance payable to seasonal workmen of different categories will be enhanced as follows with effect from 1999 off-season onwards.
Category Existing Revised Unskilled 25% 30% Semiskilled 35% 40% Skilled, Clerical & Supervisory 50% 50% (remain unaltered)
11.2 For the purpose of calculating eligible Retaining Allowance, the basic salary, Variable Dearness Allowance, Fixed Allowance and Personal Pay of the workmen will alone be taken into account. "
18. The stand of both sides are extreme and unacceptable. While the Management contends that for the full year, the petitioners would be entitled to only 50% of the retaining allowance, the petitioner unions claim that they will be entitled to 50% of the wages throughout the year. I am inclined to hold that both the contentions cannot be accepted. There is no doubt over the position that in terms of Section 25-M, the laid off workmen are entitled to 50% of the wages for the layoff period. The contention of the learned senior counsel for the respondent is that Section 25-C is not applicable to seasonal employees and that hence, the claim of 50% by seasonal employees as a matter of right cannot be sustained. Section 25-C is only a provision by reference, as provided under Section 25-M for determining the rights/quantum of compensation payable during the layoff period. Section 25-C has to be read into Section 25-M for the purpose of calculating the compensation and it is immaterial whether Section 25-C would apply to seasonal industries/employees or not. When once it is held that on the facts of this case, the order passed under Section 25-M is applicable to the petitioners, it follows that the petitioners are entitled to the quantum of compensation payable as calculable under Section 25-C for the lay-off period.
19. Therefore, the seasonal employees are undoubtedly entitled to 50% of their full wages during the crushing period. For the non-crushing period, in terms of the agreement, the petitioners are entitled to retaining allowance. The stand of the Union is that the retaining allowance is not a regular wage and it is something in the nature of subsistence allowance payable for the sake of sustenance of the workers. Therefore, according to them, there can be no further reduction over the said amount. I am unable to agree. Retaining allowance will also be "wages" in terms of Section 2(rr). Under normal circumstances, a seasonal employee will not be entitled to any wages during the non-seasonal period (non-crushing period) when they are not engaged and it is only by virtue of the settlement under Section 18, the Management had bound itself by an agreement to pay a fixed percentage as retaining allowance and the seasonal workers have acquired an enforceable right to receive the retaining allowance. During the layoff period, as the factory had become non-functional, the seasonal employees shall be entitled to compensation only in terms of Section 25-M read with Section 25-C, "which shall be equal to 50% of the total of the basic wages and Dearness Allowance that would have been payable to him had he not been so laid off."
20. The underlined portion makes it clear that the entitlement will be on the wages that would have been payable to him, had he not been so laid off. Therefore, in the case of seasonal employees, had they not been laid off, they would have received only the retaining allowance and not the full wages. It follows that they would be entitled only to 50% of retaining allowance for the non-crushing period.
21. Retaining allowance cannot be equated to subsistence allowance. In the case of suspension of the employee, it is an issue which is within the discretion of the management either to keep him in service or under suspension. If the management chooses to place him under suspension, then the employee is entitled to receive an allowance. But in the case of a seasonal employee, he is not entitled to any payment. It is only by virtue of agreement between parties, they are entitled to receive the retaining allowance. The factum of non-employment of the seasonal employees during non-crushing period is beyond the control of the management. Therefore, there can be no equation of retaining allowance with subsistence allowance during suspension.
22. With the result, I am inclined to order this writ petition subject to the following observations:
(i) The seasonal employees would be entitled to receive 50% of their wages during crushing season;
(ii) They would be entitled to receive 50% of the retaining allowance during non-crushing season;
(iii) This order shall be effective from the date when the factory was laid off and till the layoff continues.
No costs.