Punjab-Haryana High Court
The Karnal Cooperative Sugar Mills Ltd. vs The Labour Court And Ors. on 20 November, 2002
Equivalent citations: (2003)134PLR233
JUDGMENT G.S. Singhvi, J.
1. This is a petition for quashing award dated 28.4.1981 passed by Labour Court, Rohtak in Reference Cases Nos. 197, 202 to 2098, 212, 216 to 220, 222 and 255 of 1978 for reinstatement of respondents No. 3 to 19 with 50% back wages.
2. The petitioner is a registered cooperative society. It is running a sugar mill at Karnal. Respondents No. 3 to 19 are employed in the services of the petitioner as Helper-Fitters and Clerks. Their services were terminated vide notice dated 28.10.1977 (Annexure P.3) issued by the Managing Director of the petitioner in furtherance of the decision taken by the Board of Directors. Respondents No. 3 to 19 challenged the action of the management by raising industrial disputes which were referred by the State Government to Labour Court, Rohtak under Section 10(1)(c) of the Industrial Disputes Act, 1947 (for short, the Act;) requiring it to determine the following question:
"Whether the termination of services of workmen were justified and in order? If not, to what relief are they entitled?"
3. In their statement of claims, respondents No. 3 to 19 pleaded that the action of the management of the mill (petitioner herein) to terminate their services was violative of Section 9A of the Act and was also arbitrary, unreasonable and unjustified.
4. The petitioner controverted the claim of respondents No. 3 to 19 by asserting that the action to retrench their services was taken in furtherance of the decision taken in the meeting of the Managing Directors of the sugar mills held on 2.9.1977 under the Chairmanship of the Chief Minister and the notice of retrenchment was issued in pursuance to the recommendations of the Screening Committee which were approved by the Board of Directors. The petitioner also raised an objection to the maintainability of the references by contending that the disputes had not been espoused by substantial number of workmen employed in the mill.
5. On the pleadings of the parties, the Labour Court framed the following issues:
"(1) Whether espousal by substantial number of workmen is necessary? If not, to what effect?
(2) Whether this Court has no jurisdiction to decide the dispute?
(3) As per reference?"
6. Thereafter, the Labour Court consolidated all the references and disposed them of by the impugned award. The Labour Court decided issues No. 1 and 2 against the petitioner by observing that its representative did not press the same. On issue No. 3, the Labour Court held that even though the action of the management of the petitioner was bonafide, the same was liable to be invalidated on account of non-compliance of Section 9A of the Act.
7. Dr. Balram Gupta assailed the impugned award by arguing that the view taken by the Labour Court on the issue of applicability of Section 9A of the Act is based on a patently erroneous interpretation of Item 10 of the Fourth Schedule. He submitted that the retrenchment of respondents No. 3 to 19 squarely fell within the ambit of Item 10 of the Third Schedule and not under any of the items specified in Fourth Schedule and, therefore, it was not necessary to issue notice to the workmen under Section 9A of the Act and the Labour Court committed a serious error by ordering their reinstatement solely on the ground of non-compliance of Section 9A of the Act. In support of his argument that notice under Section 9A is not required to be given in the case of retrenchment, Dr. Gupta relied on the decision of the Supreme Court in L. Robet D 'Souza v. The Executive Engineer, Southern Railway and Anr., 1 A.I.R. 1982 S. C. 854.
8. Shri Puneet Bali, learned counsel for respondents No. 3 to 19 supported the impugned award and argued that the view taken by the Labour Court on the legality of the notice of retrenchment does not suffer from any legal infirmity warranting interference by the High Court under Article 226 of the Constitution of India. He referred to the decisions taken in the meeting of the Managing Directors of the Sugar Mills held on 2.9.1977 to improve the functioning of their units and argued that the same clearly fall within the expression rationalisation and improvement of technique appearing in Item 10 of the Fourth Schedule. In support of his argument, Shri Bali relied on the decisions of the Supreme Court in Hindustan Lever Ltd. v. Ram Mohan Ray and Ors., (1973)4 S.C.C. 141: Workmen of the Food Corporation of India v. Food Corporation of India, (1985)4 S.C.C. 136: and Lokmat Newspaper Pvt. Ltd. v. Shankarprasad, (1999)6 S.C.C. 275.
9. I have given serious thought to the respective arguments. Section 9A and Items 10 of the Third and Fourth Schedules of the Act, which have bearing on the decision of this writ petition read as under:
"Section 9A of the Act 9A. Notice of change.- No employer, who proposes to effect any change in the conditions of service applicable to any workman in respect of any matter specified in the Fourth Schedule, shall effect such change,-
(a) without giving to the workmen likely to be affected by such change, a notice in the prescribed manner of the nature of the change proposed to be effected; or
(b) within twenty-one days of giving such notice;
Provided that no notice shall be required for effecting any such change-
(a) where the change is effected in pursuance of any settlement or award; or
(b) where the workmen likely to be affected by the change are persons to whom the Fundamental and Supplementary Rules, Civil Services (Classification, Control and Appeal) Rules, Civil Services (Temporary Service) Rules, Revised Leave Rules, Civil Service Regulations, Civilians in Defence Services (Classification, Control and Appeal) Rules or the Indian Railway Establishment Code or any other rules or regulations that may be notified in this behalf by the appropriate Government in the Official Gazette, apply.
Item 10 of the Third Schedule
10. Retrenchment of workmen and closure of establishment; and xx xx xx Item 10 of the Fourth Schedule XX XX XX
10. Rationalisation, standardisation or improvement of plant or technique which is likely to lead to retrenchment of workmen;"
10. Conjoint reading of the provisions quoted above shows that the employer cannot effect any change in the conditions of service applicable to any workman in respect of any matter specified in Fourth Schedule without giving to the workmen likely to be affected by such change a notice in the prescribed manner specifying the nature of the change proposed to be effected. Fourth Schedule contains 11 items which fall within the expression "conditions of service". Item 10 thereof speaks of rationalisation, standardisation or improvement of plant or technique which is likely to lead to retrenchment of workmen. Third Schedule, to which reference has been made in Section 7A, specifies the matters which fall within the jurisdiction of the Industrial Tribunal. Item 10 thereof relates to retrenchment of workmen and closure of establishment.
11. It is, thus, clear that if a workman is retrenched as a consequence of implementation of the scheme/programme of rationalisation or stanardisation undertaken by the employer or on account of improvement of plant or technique in the industry, then it would amount to change in the conditions of service within the meaning of Item 10 of Fourth Schedule and the employer is obliged to give notice in terms of Section 9A to the affected workman before effecting retrenchment. However, no such notice is required in the case of retrenchment simpliciter or closure of the establishment who fall within the ambit of Item 10 of Third Schedule.
12. In the light of the above, it is to be seen whether the impugned award is vitiated by error of jurisdiction or an error of law apparent on the face of the record warranting interference under Article 226 of the Constitution of India.
13. The para-meters for exercise of power by the High Court under Article 226 of the Constitution of India for issuance of a writ of certiorari are well-defined. A writ of certiorari can be issued for correcting errors of jurisdiction committed by an inferior Court or Tribunal or where in exercise of jurisdiction conferred on it, the Court or the Tribunal acts illegally or improperly i.e. it decides a question without giving an opportunity to be heard to the party affected by the order or where the procedure adopted by it is opposed to the principles of natural justice. It is equally well settled that the jurisdiction of the High Court to issue a writ of certiorari is supervisory jurisdiction and not appellate one and an order or award passed by the inferior Court or Tribunal cannot be nullified except when it suffers from an error of law apparent on the face of the record. The question as to whether an order or award suffers from an error of law cannot be decided by applying a straight-jacket formula. An error of law is one which can be discovered on a bare reading of the impugned order or award together with the relevant record. In other words, an error which can be discovered only after a detailed scrutiny of the evidence produced by the parties or re-appreciation thereof and lengthy arguments at the bar, cannot be regraded as an error of law warranting issuance of a writ of certiorari. A finding of fact reached by the inferior Court or Tribunal, as a result of appreciation of evidence, cannot be re-opened or questioned in writ proceedings, unless it is shown that in recording the said finding, the Court or the Tribunal had erroneously refused to admit admissible and material evidence or erroneously admitted inadmissible evidence and the same influenced its finding/conclusion. Likewise, a finding of fact based on no evidence would be regarded as perverse and can be corrected. However, sufficiency or adequacy of the evidence relied upon by the inferior Court or Tribunal or the quasi-judicial authority cannot be gone into by the High Court while considering the prayer for grant of a writ of certiorari. Similarly, the mere possibility of forming a different opinion on re-appreciation of evidence produced by the parties is not sufficient for issue of a writ of certiorari.
14. In Sayed Yakoob v. K.S. Radhakrishnan and Ors., A.I.R. 1964 S.C. 477, their Lordships of the Supreme Court laid down the following para meters for exercising certiorari jurisdiction by the High Courts:
"The jurisdiction of High Court to issue a writ of certiorari is a supervisory jurisdiction and the Court exercising it is not entitled to act as an appellate Court. This limitation necessarily means that findings of fact reached by the inferior court or Tribunal as a result of the appreciation of evidence cannot be reopened or questioned in writ proceedings. An error of law which is apparent on the face of the record can be corrected by a writ, but not an error of fact, however grave it may appear to be.....
The adequacy or sufficiency of evidence led on a point and the inference of fact to be drawn from the said finding being within the exclusive jurisdiction of the Tribunal, the points cannot be agitated before a writ Court."
15. In Shaikh Mahammad Umarsaheb v. Kadalaskar Hasham Karimsab and Ors., A.I.R. 1970 S.C. 61, their Lordships of the Supreme Court, while dealing with the power of the High Court under Article 226 to reappreciate the evidence produced before the trial Judge, held as under:
"Where the evidence adduced before the trial Judge was not so immaculate that another Judge might not have taken a different view, it cannot be said that there was no evidence on which the trial Judge could have come to the conclusion he did. When the trial Court accepts the evidence, the High Court which is not hearing an appeal cannot be expected to take a different view in exercising jurisdiction under Articles 226 and 227."
16. In Jitendra Singh Rathor v. Shri Badiyanath Ayurved Bhawan Ltd. and Anr., A.I.R. 1984 S.C. 976, a two Judges Bench of the Supreme Court dealt with the scope of certiorari jurisdiction of the High Court qua the award passed by the Tribunal under the Act and held as under:
"The High Court is undisputably entitled to scrutinise the orders of the subordinate tribunals within the well accepted limitations and, therefore, it could in an appropriate case quash the award of the Tribunal and thereupon remit the matter to it for fresh disposal in accordance with law and directions, if any. The High Court is not entitled to exercise the powers of the Tribunal and substitute an award in place of the one made by the Tribunal as in the case of an appeal where it lies to it."
17. In R.S. Saini v. State of Punjab and Ors., J.T. 1999(6) S.C. 507, the Supreme Court upheld the order passed by this Court dismissing the writ petition filed against the order of the petitioners' removal from the office of the President of Municipal Committee. Some of the observations made in that decision, which are worth noticing are as under:
"The Court while exercising writ jurisdiction wilt not reverse a finding of the inquiring authority on the ground that the evidence adduced before it is insufficient. If there is some evidence to reasonably support the conclusion of the enquiring authority, it is not the function of the Court to review the evidence and to arrive at its own independent finding. The enquiring authority is the sole Judge of the fact so long as there is some legal evidence to substantiate the finding and the adequacy or reliability of the evidence is not a matter which can be permitted to be canvassed before the Court in writ proceedings."
18. Keeping the aforesaid principles in mind, I may now advert to the impugned award, perusal of which shows that while dealing with issue No. 3, the Labour Court referred to the decisions taken in the meeting of the Managing Directors of the State-owned sugar mills held on 2.9.1977, Section 9A of the Act and observed as under:
"The case of the management is that a meeting of the Managing Directors of Sugar Mills was held on 2nd September, 1977 under the Chairmanship of Chief Minister, Haryana, wherein it was decided that alongwith other things that there was over staffing in the factories much in excess of requirements and there was room for cutting down the strength of the staff and screening of the staff should also be made so as to weed out inexperienced, incompetent and undesirable persons. Screening committee was formed and on receipt of recommendations from the Screening committee the meeting of the Board of Directors was held on 14th October, 1977 to consider and approve the recommendations of the staff screening committee. Exhibit MW-2/1 was the copy of the proceedings. It was decided to abolish some of the posts and to retrench some of the other workmen who were found surplus as per the law. All these workmen were given notices of termination and those were paid the notice pay alongwith the retrenchment compensation whosoever was eligible to receive the same. The reduction in the staff was made in order to effect economy as the management experienced heavy losses during the first season.
XX XX XX Notice under Section 9A is a must when conditions of service are to be changed in order to bring about rationalisation, standardisation or improvement of plant or technique which is likely to lead to retrenchment of workmen. Rationalisation further connotes in relation to an industry "to organise so as to achieve greater efficiency and economy." The management has undoubtedly effected such changes in order to achieve better results with less staff. The non-observance of the provisions contained in Section 9A has rendered the order of retrenchment/termination improper and as such illegal but for this action of the management would have been perfectly justified and legal both."
19. Before commenting upon the reasons assigned by the Labour Court and dealing with the arguments of the learned counsel for the parties, I consider it appropriate to make a reference to the decisions taken in the meeting of the Managing Directors held on 2.9.1977 under the Chairmanship of the then Chief Minister. The thrust of the discussion held in that meeting centered round the issue of the functioning of various State-owned sugar mills which were running in losses. It was felt that this was mainly due to be over-staffing of the until, engaging of inexperienced and incompetent persons and lack of proper maintenance of machinery and, therefore, it was decided to cut down the strength of staff and also to weed out inexperienced, incompetent and undesirable persons. It was further decided that the mills should positively start crushing from the first week of November and working of engineering and manufacturing departments should be toned up. For the sake of reference, the relevant portions of the decisions taken in the meeting of 2.9.1977 are reproduced below:
"B. Staffing- C.A.C. pointed out that there was over-staffing in the factory's. Staff recruited was much in excess of requirements. Again the staff appointed was lacking in requisite qualifications and experience and in a number of cases considerations other than merit had prevailed while making the appointments. The Mills could be conveniently run with a complaint of 600 to 700 persons. There is lot of room for cutting down the strength of staff. Besides screening of the staff should also be made so as to weed out inexperienced, incompetent and undesirable person. Chief Minister remarked that due action should be taken in this regard.
It was also suggested that a sub committee may be constituted at the state level to make recruitment for senior categories of staff. C.A.C. said that the matter would be examined in detailed an early decision taken.
XX XX XX C.A.C. said that the mills should start crushing from the first week of November without fail. Towards this end, Managing Directors should ensure that the arrangements are complete in all respects for starting the factories on due time. The machinery should be brought to proper trim. The working of engineering and manufacturing departments should be toned up- Early start of the season would ensure grant of incentive from the Government of India by way of increased quota of non levy sugar and rebate in excise duty.
In the end, C.M. exhorted the Managing Directors to run the mills on sound and efficient lines and bring them to proper level of performance. At present the factories are running in losses. These being cooperative institutions, he said, it is all the more responsibility of the management and the functionaries to put them on proper footing."
20. For implementing the above mentioned decisions, the Board of Directors of the petitioner constituted a sub-committee to undertake screening of the staff of various sections. The sub-committee recommended reduction of man-power in various departments and wings of the mill. The recommendations of the sub-committee were accepted by the Board of Directors on 14.10.1977 (Annexure P.2) and the follow-up action was taken by the Managing Director by issuing notice Annexure P.3.
21. In my opinion, the action taken by the management of the petitioner in furtherance of the decision taken in the meeting of the Managing Directors of the State-owned sugar mills which resulted in the termination of the services of respondents No. 3 to 19 by way of retrenchment clearly fell within the ambit of Item 10 of Fourth Schedule. The word 'rationalisation' appearing in the said item is wide enough to take within its fold the exercise to reduce the surplus staff and to weed out inexperienced, incompetent and undesirable members of staff. The decision to tone up engineering and manufacturing department also fell within the escape of Item 10 of the Fourth Schedule. Therefore, it was imperative for the petitioner to give notice to respondents No. 3 to 19 in terms of Section 9A(1) which it had failed to. Thus, the Labour Court did not commit any error by holding that the exercise undertaken by the management of the petitioner which led to retrenchment of respondents No. 3 to 19 was vitiated due to non-compliance of the mandatory provisions of Section 9A of the Act and I do not find any valid ground to interfere with the impugned award.
22. The argument of Dr. Gupta that it was a case of retrenchment simpliciter and was covered by Item 10 of Third Schedule is liable to be rejected in view of the finding recorded by the Labour Court, with which we have concurred, that their services had, in fact, been terminated as a sequel to the exercise undertaken by the management of the petitioner to rationalise its cadre and improve the functioning of the mill and the same fell within the ambit of Item 10 of Fourth Schedule. Learned counsel could not point out any error in the appreciation of facts and evidence by the Labour Court. Therefore, the impugned award cannot be held as vitiated by an error of law.
23. I may now deal with the decisions relied upon by the learned counsel for the parties. In L. Rober D. Souza v. The Executive Engineer, Southern Railway and Anr., 1 A.I.R. 1982 S.C. 854, the Supreme Court considered the legality of the termination of the services of the appellant who was working as Gangman in Southern Railway. The appellant had challenged the termination of his service on various grounds including the one that it was violative of Section 9A of the Act. While rejecting the said ground of challenge, their Lordships of the Supreme Court observed asunder:-
"When a workman is retrenched, it cannot be said that change in his conditions of service is effected. The conditions of service are set out in Fourth Schedule. No item in Fourth Schedule covers the case of retrenchment. In fact retrenchment is specifically covered by Item 10 of the Third Schedule. Now, if retrenchment which connotes termination of service, cannot constitute change in conditions of service in Fourth Schedule, Section 9A would not be attracted. In order to attract Section 9A, the employer must be desirous of affecting a change in conditions of service in respect of any matter specified in Fourth Schedule. If the change proposed does not cover any matter in Fourth Schedule, Section 9A is not attracted and no notice is necessary."
24. In my opinion, the above quoted observations do not have any bearing on the case in hand because their Lordships were not dealing with the case of retrenchment of service brought about as a consequence of rationalisation of the staffing pattern and improvement in the functioning of the establishment or the factory of the employer.
25. In Lokmat Newspapers Pvt. Ltd. v. Shankarprasad (supra), a two-Judges Bench of the Supreme Court considered the scope of Section 9A of the Act and Item 10 of the Fourth Schedule and after making reference to the earlier decisions in the cases of Hindustan Lever Ltd. v. Ram Mohan Ray and Ors. (supra) and Workmen of the Food Corporation of India v. Food Corporation of India (supra) held as under;-
"It is clear from the very wordings of Section 9A read with Item 10 of the Fourth Schedule that any management which seeks to introduce a new working pattern for its existing work force by any future scheme of rationalisation, Standardisation or improvement of plant or technique which has a tendency to lead to future retrenchment of workmen has to give prior notice of a proposed change to the workmen who can get an opportunity to show that they may not be retrenched because of the new scheme of rationalisation etc. which is in the offing and can suggest ways and means available to the management to avoid such proposed retrenchment of the workmen despite such introduction of a new scheme. If the proposed scheme of rationalisation has a likelihood of rendering existing workmen surplus and liable to retrenchment, then Item 10 of Schedule IV would squarely get attracted. Introduction of such rationalised scheme by itself would amount to alteration of the conditions of service of the workmen to their prejudice. It, therefore, follows that before effecting such a change, meaning thereby, before introducing such a rationalisation scheme which has a tendency to change the conditions of service of the workmen, notice under Section 9A as a condition precedent becomes a must. Notice under Section 9A must precede the introduction of rationalisation concerned, it cannot follow the introduction of such a rationalisation. But if the proposed scheme is not likely to displace any existing workmen then mere rationalisation which has to nexus with the possibility of future retrenchment of workmen would not attract item 10 of Schedule IV and would remain a benign scheme of rationalisation having no pernicious effect on the existing working staff.
XX XX XX When such dispute regarding the proposed introduction of the rationalisation scheme is referred for adjudication of the competent court, the said Court after hearing the parties and considering the evidence can come to the conclusion whether the proposed scheme is justified on facts or not and whether any violation of the provisions of Section 9A had resulted in illegality of the consequential orders of retrenchment. Such competent court can also accordingly pass appropriate consequential orders directing the Management to withdraw such a scheme of rationalisation or in any case, can order reinstatement of the workmen with proper back wages if such retrenchment is found to be illegal on account of failure to comply with the provisions of Section 9A of the Act."
26. In my opinion, the ratio of the afore-said decision is squarely applicable to the case in hand and supports the conclusion recorded by the Labour Court.
27. In the result, the Writ Petition is dismissed.