Bombay High Court
Maharashtra General Kamgar Union vs All-India Handloom Fabrics Marketing ... on 11 June, 1991
Equivalent citations: 1991(3)BOMCR63, (1991)93BOMLR703, [1991(63)FLR567], (1992)IILLJ652BOM, 1992(1)MHLJ203
JUDGMENT
1. This petition under Article 226 of the Constitution impugns the second respondent's verdict upon a Complaint under the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act 1971 (PULP Act).
2. The first respondent-hereinafter referred to as to 'employer' or 'society' - is a Government of India sponsored body to arrange for the more advantageous marketing of fabrics manufactured by handloom weavers scattered all over the country. It has established sales depots at various places and those in Bombay included the one located at the Dadabhai Nawroji Road.
This depot was gutted in a fire that broke out on October 16, 1982. The fire left the employer with a depot at Mahim in Bombay. The 155 employees working in the D.N. Road depot were without work. For some time there was a lay off. Sixty two employees were transferred to depots outside Bombay. The Society converted an office at the Janmabhoomi Chambers into a sales depot and some of the laid - off employees were shifted thereto. The petitioner - Union on March 30, 1985 applied to the Society to accord recognition to it as the sole representative of the employees claiming that it had the support of the majority of the workers. The Society on April 10, 1985 issued a circular inviting applications from its employees at all depots for voluntary transfers to Coimbatore, Jaipur and Surat where it proposed to open new depots. Transfer orders impugned in the petition were issued to seven workmen - three being transferred to Jaipur and four to Coimbatore. The orders explained the transfers as being necessitated by the curtailment of the Society's business at Bombay making the staff here surplus and the employer's desire to utilise their experience in the new sales depots in the above cities. The Union's complaint impugning the transfers as an unfair labour practice having been dismissed, it approached this Court. After the rejection of interim relief, petitioner moved a Division Bench in appeal and secured an interim injunction staying the operation of the transfer orders.
3. The Union assails the transfers as being actuated by a desire to wreak vengeance upon the workmen for having shifted their allegiance to it and also ensuring that of the majority of their colleagues. Next was the desire of the Depot Manager (Vimal Raut) at Bombay to have her own favorites here by displacing the persons figuring in the transfer list. This was made clear in her letter at Ex.C. The proximity in time between the two events and the transfer orders established a clear case of mala fides. Therefore the transfers were not a legitimate exercise of the employer's power to deploy personnel. This apart the selection of those transferred showed no rational at work. The same was haphazard and whimsical. No rule or term of contract permitted the Society to transfer any worker contrary to his wishes. The so-called need to curtail the staff at Bombay was a myth and in any case a short-term reduction in the business did not empower the Society to effect transfers. The transfers were an Unfair Labour Practice (ULP) under Item 3 of Schedule IV to the PULP Act. The Society denied the contentions summarised above. It maintained that the gutting of the D.N. Road depot had brought about a sizable decline in its business at Bombay. It had tried alternatives to prevent the employees from facing unemployment. Having exhausted all alternatives, it had to take resource to the solution of transferring a few employees. The coming into power of the petitioner - Union had nothing to do with the making of the transfer orders. The Society had to contend with trade unions since long and petitioner's predecessors were as devoted to the workers' cause as was the petitioner. It had the power to effect transfers and there was no irrationality vitiating the transfer of the employees represented by the petitioner.
4. The second respondent negatived the petitioner's case on all counts and dismissed its Complaint. No interim relief having been granted, petitioner went in appeal to a Division Bench - vide Appeal No. 21 of 1987. That appeal was allowed on February 19, 1987.
5. Counsel for parties reiterate the stands taken by their clients in the Industrial Court. The first question is whether the Society had the right to transfer its employees. Mr. Pai asserts the negative, basing his stand on the absence of any of the six workmen having signed the appointment later subjecting them to Staff Regulations (SRs). The alternatives pleaded are that the said being in conflict with the Scheduled 'Model for Standing Order's' (MSOs) framed under the Industrial Employment (Standing Orders) Act, 1946 (S.O. Act).
6. Inso far as the applicability of the SRs to the employees is concerned, these were framed prior to the joining of the Society's service by the workmen figuring in this case. Regulation 56 says that every employee joining the employment shall be given a copy thereof and a declaration subscribing to them being obtained from him. Of the six employees figuring in this case, atleast one - Kapri - is proved to have signed the prescribed declaration. The argument that those not giving such a declaration would not be bound, does not merit acceptance. Regulation 2 makes the SR applicable to all employees of the Society "Unless otherwise specifically stated." The signing or otherwise of the declaration is of no consequence to their efficacy vis-a-vis the service conditions of the workman. In fact, the employees have availed of the SRs in the matter of leave, overtime etc. Within certain limits an employer is entitled to frame rules to regulate the services of its employees. When an employee joins the employment, he subjects himself to prevailing regulations and this is an implied term of the contract of employment. It is not the employees' case that they were specifically excluded from the operation of the SRs and therefore that aspect does not arise for consideration.
7. Mr. Pai argues that the SRs, are in the nature of Standing Order. The Schedule to the S.O. Act enumerates matters on which Standing Orders can be made. Transfer of employees from one establishment to another is not provided for. Therefore the SR is ultra vires to the extent it provides for the Society to unilaterally transfer any employee. The power to transfer employees throughout the country and even aboard is to be found in Regulation 17. In support of his submission Mr. Pai relies on Workmen of Lakheri Cement Works Ltd. v. Associated Cement Companies Ltd. 1970 (20) F.L.R. 243. That decision directed the expunging of new clauses in a Standing Order because the clauses concerned topics which were not included in the Schedule to the S.O. Act. The inclusion of such clauses was stamped as being "entirely without jurisdiction." Section 38-B of the Bombay Shops and Establishments Act, 1948 (Shop Act) makes the S.O. Act together with Rules and MSOs applicable to the establishment run by the Society.
8. The Society contends that MSOs cover an area entirely different than that in which the SRs operate. The Schedule to the S.O. Act specifies matters to be provided by MSO-s. Items 1 to 10 do not cover the subject of transfer of employees. Item No. 11 is in the nature of a residuary for it deals with "any other matter which may be prescribed." The combined effect of Section 2A(1) of the S.O. Act and Section 38B of the Shops Act compels the acceptance of the Union's contention. These provisions together with definition clauses from the first enactment and those referred to therein read as under :-
Section 2A(1) of S.O. Act :
Where this Act applies to an industrial establishment, the Model Standing Orders for every matter set out in the Schedule applicable to such establishment shall apply to such establishment from such date as the State Government may by notification in the Official Gazette appoint in this behalf :
Provided that nothing in this section shall be deemed to affect any Standing Orders which are finally certified under this Act and have come into operation under this Act in respect of any industrial establishment before the date of the coming into force of the Industrial Employment (Standing Orders) (Bombay Amendment) Act, 1957.
Section 2(e) of S.O. Act :
"industrial establishment" means -
(i) an industrial establishment as defined in clause (ii) of Section 2 of the Payment of Wages Act, 1936, or .......
Section 2(ii) of the Payment of Wages Act, 1936 "Industrial or other establishment" means any
(a) tramway service, or motor transport service engaged in carrying passengers or goods or both by road, for hire or reward;
(aa) air transport service other than such service belonging to, or exclusively employed in the military, naval or air forces of the Union or the Civil Aviation Department of the Government of India :
(b) dock, wharf or jetty :
(c) inland vessel, mechanically propelled :
(d) mine, quarry or oilfield;
(e) plantation;
(f) workshop or other establishment in which articles are produced, adapted or manufactured, with a view to their use, transport or sale;
(g) establishment in which any work relating to the construction, development or maintenance of buildings, roads, bridges or canals, or relating to operations connected with navigation, irrigation or the supply of water, or relating to the generation, transmission and distribution of electricity or any other form of power is being carried on :
(h) any other establishment or class of establishments which the Central Government or a State Government may, having regard to the nature thereof, the need for protection of persons employed therein and other relevant circumstances, specify, by notification in the Official Gazette.
Section 2(e)(ii) of S.O. Act.
"industrial establishment" means -
(ii) a factory as defined in clause (m) of Section 2 of the Factories Act, 1948, or .......
Section 2(m) of the Factories Act, 1948 "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 ordinary so carried on, -
but does not include a mine subject to the operation of the Miles Act, 1952, a mobile unit belonging to the armed forces of the Union, a railway running shed or a hotel restaurant or eating place;
Explanation - For computing the number of workers for the purposes of this clause all the workers in different relays in a day shall be taken into account.
Section 38B of the Shops Act :
The provisions of the Industrial Employment (Standing Orders) Act, 1946, in its application of the State of Maharashtra (hereinafter in this section referred to as "the said Act"). and the Rules and Standing Orders (including Model Standing Orders) made thereunder from time to time, shall, mutatis mutandis, apply to all establishments to which this Act applies as if they were industrial establishments within the meaning of the said Act.
According to the Industrial Court the S.O. Act does not prohibit the framing of regulations not inconsistent with MSOs. This is an indirect way of saying that the residuary clause covers employer framed Standing Orders, unless these entrench upon topics prohibited by the MSOs. Such a contention raised in the Lakheri Cement case (supra) was negatived in no uncertain terms. It is not disputed that the SRs have not been got certified so as to avail for them the protection given by the proviso to Section 2A(1) of the S.O. Act. Therefore the impugned transfers are illegal.
9. Mr. Pai also submits that the transfer clause in the SR should be voided as vitiated by undue influence. Counsel seeks sustenance for this argument from Automative Manufacturers v. Nanalal Panachand 1977 L.I.C. 1188. That authority is predicated on the transfer clause being implied in a contract of service. In the instant case the SRs contain an express clause of transfer. The employees affected being lowly paid or in minor positions is not proof of their succumbing to the SRs because of undue influence. Having regard to the country as a whole being the Society's area of operation there would be nothing unnatural or oppressive about the Society wanting to have the right to transfer its employees to any part of the country.
10. The Union attacks the transfers as being devoid of any principle. Those picked upon for a transfer do not answer any particular criterion. They have been picked out at random. It is difficult to understand, much less uphold, this contention. The Society says its business in Bombay has been curtailed because of the gutting of the. D.N. Road Branch. Other depots in the city do not require those rendered superfluous by the fire. Depots elsewhere can do with the services of those rendered redundant in Bombay. For that reason a certain number of employees have been transferred. Being and employer the Society is not required to give a reasoned order as to why it has chosen the petition-covered employees and not others. In fact the Union was asked to submit a list of those employees who were willing to be transferred. Put to this test, the Union flunked and could not come out with an answer.
11. Equally unsubstantiated is the ground of the Society resorting to transfers as a penal measure, Vimal Raut's letter proves no more than the superiority of certain employees vis-a-vis those working at the D.N. Road depot at the time the letter was written. That there were better employees does not mean that the Union's backers were worthless. Exception is taken to the Society utilising a temporary set-back in its Bombay business to reduce the work force here. I should say that is the most natural way of tackling the problem. One cannot expect the Society to continue with a bloated labour force in Bombay despite its receding business here. Profit of the other depots is not to be utilised for wiping out the year-after-year deficits in Bombay. Feather-bedding is a sure path to economic ruination. It was argued that the Society has a centralised system of accounting and therefore should not be heard to plead sectional losses as a justification for deployment of personnel. The manner of maintenance of accounts is irrelevant vis-a-vis positioning of employees. The elementary precaution of reduction in work requiring a reduction in the numbers of those working, is not denied to those who have a centralised system of accounting.
12. The Union pleads that its entry into the realm of those in the employ of the Society is the real reason for the impugned transfers. A surmise and no more, the plea has to be rejected.
13. To recapitulate the petitioner succeeds on only one ground, to wit, the power of transfer being violative of Section 2A(1) of the S.O. Act. In terms, Item 3 of Schedule IV of the PULP Act may not apply for it pertains to -
"transferring an employee mala fide from one place to another, under the guise of following management policy."
Lack of legality to an act or omission amounts to legal mala fides and that would be covered by Item 3 supra. On this short ground, petitioner was entitled to the relief claimed. Hence the order.
14. Declared that the impugned transfer orders vis-a-vis those whose transfers were stayed vide the judgment in Appeal No. 21 of 1987 amount to unfair labour practice. The Society is directed to cease and desist from enforcing the same. The dismissal of the Complaint is set aside and the rule is made absolute in the above terms. Parties left to bear their own costs throughout