Chairman and Managing Director, The Fertilizers And Chemicals Tranvancore Ltd. & Anr vs General Secretary FACT Employees Association & Ors.

CIVIL APPEAL No. 3803 OF 2019 (Arising out of S.L.P.(C) No.99 of 2018)

Chairman and Managing Director, The Fertilizers And Chemicals Tranvancore Ltd. & Anr. ….Appellant(s)

VERSUS

General Secretary FACT Employees Association & Ors. ….Respondent(s)

WITH

CIVIL APPEAL No. 3804 OF 2019 (Arising out of S.L.P.(C) No.100 of 2018)

JUDGMENT

Abhay Manohar Sapre, J.

1. Leave granted.

Signature Not Verified

2. These appeals are directed against the final Digitally signed by ANITA MALHOTRA Date: 2019.04.11 17:17:57 IST Reason:

judgment and order dated 25.01.2017 passed by

the High Court of Kerala at Ernakulam in W.A. 1 Nos.1820 and 1824 of 2012 whereby the Division

Bench of the High Court dismissed the writ appeals

filed by the appellants herein and affirmed the

judgment dated 21.08.2012 passed by the Single

Judge of the High Court in W.P. Nos.33938/2008

and 2556 of 2009.

3. These appeals involve a short point as would

be clear from the facts stated infra.

4. The appellants herein are the respondents and

the respondents herein (respondent Nos.1­10) are

the writ petitioners of the writ petitions, out of

which these appeals arise.

5. Appellant No.1 is a Public Sector Undertaking

and engaged in the business of manufacture and

sale of various kinds of fertilizers and chemicals. It

has a factory at Travancore in the State of Kerala.

Respondent Nos.1 to 10 are the Trade Unions of the

workers working in the manufacturing unit of

appellant No.1 at the relevant time.

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6. On 23.01.1978, a Memorandum of Settlement

was executed between appellant No.1 (PSU) and

respondent Nos.1 to 10, i.e., (Trade Unions) wherein

it was inter alia agreed between the parties that the

existing superannuation age of 60 years will remain

unchanged in respect of all the workers working in

the appellant's Undertaking at Udyogamandal

Division, Head Office including those who are on the

rolls of the Undertaking as on the date of

settlement.

7. It was also agreed that those who are recruited

on and after Memorandum of Settlement in

question shall retire on attaining the age of 58

years.

8. On 19.05.1998, the Central Government

issued a direction to all the Public Sector

Undertakings of the Central Government and

directed them to increase the age of superannuation

upto below board­level employees from 58 years to

3 60 years. This was made compulsory to all the

PSUs. Appellant No.1 accordingly ensured its

compliance and made it applicable to their

employees by a resolution dated 27.05.1998.

9. Since the financial condition of the appellant

(PSU) was deteriorating day­by­day, it had become

difficult for them to give effect to the aforesaid

decision/direction. The appellant (PSU), therefore,

brought this fact to the notice of the Central

Government. By letters dated 02.09.1999 and

11.07.2001, the Central Government directed the

appellant (PSU) to take several measures to improve

their financial performance and also undertake the

work of rationalization of their workers and bring it

to a manageable level. This included lowering of the

age of retirement of the employees. After extensive

deliberations and making several efforts for

reducing the financial losses, the Central

Government eventually by letter dated 25.04.2003

4 directed the appellant (PSU) to change the

retirement age of pre­1978 employees from 60 years

to 58 years. In compliance with the letter dated

25.04.2003 of the Central Government, the

appellant(PSU) issued an order dated 29.04.2003 to

reduce the retirement age of pre­1978 employees

from 60 years to 58 years.

10. This gave rise to filing of the original petitions

by the respondents (Trade Unions) in the Kerala

High Court (OP Nos.14598, 14599 & 14976/2003)

challenging therein the legality and correctness of

the order dated 29.04.2003.

11. The Single Judge by order dated 12.08.2003

upheld the order dated 29.04.2003 and dismissed

the original petitions. The Single Judge inter alia

held that first, the appellant (PSU) was facing acute

financial crisis and hence to improve the financial

crisis some positive action was also taken for the

survival of the appellant's industry; Second, the

5 Trade Unions had agreed vide settlement dated

28.08.2001 that having regard to the emergent

situation which had arisen, the employment

strength was reduced by 20% to save the industry;

Third, there did not appear any justifiable reason to

retain the retirement age of 60 years only to pre­

1978 employees; Fourth, the decision to reduce the

retirement age was not violative of Article 14 of the

Constitution inasmuch as it was done to make the

retirement age uniform to all the workers with a

view to save the industry; and Fifth, if it had not

been done, it would have been impossible to

continue with the existing industry. (See Paras 11

and 12 of the order of the Single Judge). However,

in the concluding Para, the Single Judge observed

that it shall be open to the writ petitioners to work

out their other remedies available in law.

12. The respondents (Trade Unions) felt aggrieved

and carried the matter in intra court appeal (WA

6 Nos. 1565,1595, 2112 & 2113/2003) before the

Division Bench. By order dated 18.12.2003, the

Division Bench dismissed the appeals and affirmed

the order of the Single Judge. The Division Bench

inter alia held that, first, the acceptance of the

demand raised by about 10% of the total employees

is likely to affect adversely the interest of about 90%

of the employees; Second, the appellant (PSU) was

facing acute financial crisis and, therefore, having

regard to the totality of the circumstances, there are

no grounds to interfere; Third, clause 14 of the

Memorandum of Settlement provided that the

dispute arising between the parties in relation to the

settlement should be resolved by means of

arbitration, i.e., by the Labour Commissioner and

the same having been entertained by the Labour

Commissioner, the same be pursued. (See Para 8 of

the order of the Single Judge).

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13. The Trade Unions (respondents) felt aggrieved

and filed special leave petitions (CC Nos.3653­

3655/2004) in this Court. By order dated

23.04.2004, this Court dismissed the SLPs.

14. It is with this background, the State

Government by order dated 18.05.2004 as amended

by GO dated 22.01.2008, made the following

industrial reference (No.10/2004) at the instance of

the Trade Unions to the Labour Court, Ernakulum

to decide the following question:

“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?”

15. The State Government also made another

reference (No.4/2005) at the instance of the Trade

Unions by order dated 02.03.2005 to the Labour

Court to decide the following question:

“Whether the action of the management of FACT, Ltd. Udyogamandal Ltd. terminating 8 the service of 42 workmen is justifiable or not? If not, what relief the workmen are entitled to?”

16. The Labour Court, by award dated 02.07.2008

answered the reference (No.10/2004) against the

Trade Unions and in favour of the appellant(PSU). It

was held that since the question referred to the

Labour Court in the reference was already dealt

with in the earlier round of litigation by the High

Court and the Supreme Court and the same having

attained finality consequent upon the dismissal of

the SLPs by this Court by order dated 23.04.2004,

the reference made by the State was barred by the

principle of res judicata. So far as the other

reference (No.4/2005) was concerned, it was

accordingly disposed of by award dated 02.08.2008

on the same lines.

17. The Trade Unions/employees (respondents

herein) felt aggrieved and filed the writ petitions

(Nos.33938/2008 and 2556/2009) in the High

9 Court of Kerala against the award dated

02.07.2008.

18. The Single Judge by order dated 21.08.2012

allowed the writ petitions and quashed the awards

dated 02.07.2008 and 02.08.2008 of the Labour

Court. It was held that the reference made by the

State to the Labour Court was not barred by res

judicata. The Single Judge then awarded 30% of

the wages payable to each employee instead of

granting them a relief of reinstatement in service.

19. The appellant (PSU) felt aggrieved and filed

intra court appeals. The Division Bench by

impugned order dismissed the appeals and upheld

the order of the Single Judge, which has given rise

to filing of the present appeals by the

appellant(PSU) after obtaining the special leave to

appeal from this Court.

20. So, the short question, which arises for

consideration in these appeals, is whether the High

10 Court was justified in holding that the reference

made by the State to the Labour Court was not

barred by the principle of res judicata. In other

words, a question, which arises for consideration, is

when the issue referred by the State in reference

was already decided by the High Court between the

parties in the writ petitions, writ appeals and lastly

in SLPs by this Court in the earlier round of

litigation, whether the State had the jurisdiction to

refer the same issue to the Labour Court in

reference under Section 10 of the Industrial

Disputes Act, 1947 (hereinafter referred to as “ID

Act”) for its fresh adjudication.

21. Heard Mr. J.P. Cama, learned senior counsel

for the appellants and Mr. P.V. Surendranath,

learned senior counsel, Mr. Roy Abraham & Mr.

C.M. Patel, learned counsel for the respondents.

22. Having heard the learned counsel for the

parties and on perusal of the record of the case

11 including the written submissions, we are inclined

to allow these appeals and while setting aside the

impugned order restore the awards dated

02.07.2008 and 02.08.2008 of the Labour Court.

23. In our considered view, the question, as to

whether the principle of res judicata defined in

Section 11 of the Code of Civil Procedure, 1908

(hereinafter referred to as “the Code”) applies to the

labour proceedings or not, remains no more res

integra and stands answered by three decisions of

this Court.

24. The first case is R.C. Tiwari vs. MP State Co­

operative Marketing Federation Ltd. & Ors.

(1997) 5 SCC 125. In this case, an employee of a

co­operative society was dismissed from the

services. He, therefore, referred the dispute of his

termination to the Registrar under Sections 55 and

64 of the M.P.Co­operative Society Act. The Deputy

Registrar upheld the finding of the misconduct

12 recorded in the domestic inquiry against the

employee and upheld the termination as being legal

and proper. The State then made a reference to the

Labour Court under Section 10 of the ID Act for

deciding the legality of the termination by the

Labour Court. The Labour Court, however, declared

the domestic inquiry invalid and, in consequence,

held the termination as bad in law. The employer,

therefore, filed a writ petition in the High Court of

MP. The High Court allowed the writ petition and

set aside the award of the Labour Court. The

employee then carried the matter to this Court in

appeal. This Court dismissed the appeal and

affirmed the view taken by the High Court.

25. This Court ruled that the reference to the

Labour Court made by the State under Section 10 of

ID Act was hit by the principle of res judicata

defined under Section 11 of the Code and, therefore,

the reference made to the Labour Court was barred.

13 It was held that the issue of termination of the

employee was earlier gone into by the Deputy

Registrar on its merits and the same once answered

against the employee, it could not be again gone

into in the reference proceedings by the Labour

Court. This is what is held in Para 4:

“4. Admittedly, there is a finding recorded by the Deputy Registrar upholding the misconduct of the petitioner. That constitutes res judicata. No doubt, Section 11 CPC does not in terms apply because it is not a court, but a tribunal, constituted under the Societies Act is given special jurisdiction. So, the principle laid down thereunder mutatis mutandis squarely applies to the procedure provided under the Act. It operates as res judicata. Thus, we find that the High Court is well justified in holding that the Labour Court has no jurisdiction to decide the dispute once over and the reference itself is bad in law.”

26. The second case is Pondicherry Khadi &

Village Industries Board vs. P. Kulothangan &

Anr., (2004) 1 SCC 68. In this case also, this Court

again examined the question as to whether the

principle of res judicata including the principles of

14 constructive res judicata applies to the industrial

adjudication or not. Though this Court did not

notice the law laid down in the case of R.C.Tiwari

(supra), yet it took the same view, as is clear from

Paras 10 and 11:

“10. In our opinion, the appellant has correctly contended that the industrial dispute pertained to the same subject­matter dealt with in the earlier writ proceedings and was barred by the principles of res judicata. It is well established that although the entire Civil Procedure Code is not applicable to industrial adjudication, the principles of res judicata laid down under Section 11 of the Code are applicable1 including the principles of constructive res judicata. Thus in State of U.P. v. Nawab Hussain2 it was held that the dismissal of a writ petition challenging disciplinary proceedings on the ground that the charged officer had not been afforded reasonable opportunity to meet the allegations against him, operated as res judicata in respect of the subsequent suit in which the order of dismissal was challenged on the ground that it was incompetently passed. This Court also held: (SCC p. 808)

It may be that the same set of facts may give rise to two or more causes of action. If in such a case a person is allowed to choose and sue upon one cause of action at one time and to reserve the other for subsequent litigation, that would aggravate the burden of litigation. Courts have 15 therefore treated such a course of action as an abuse of its process.

11. The principle of res judicata operates on the court. It is the courts which are prohibited from trying the issue which was directly and substantially in issue in the earlier proceedings between the same parties, provided the court trying the subsequent proceeding is satisfied that the earlier court was competent to dispose of the earlier proceedings and that the matter had been heard and finally decided by such court. Here the parties to the writ petition filed by the respondent in the Madras High Court and the industrial dispute were the same. The cause of action in both was the refusal of the appellant to allow the respondent to rejoin service. The Madras High Court was competent to decide the issue which it did with a reasoned order on merits and after a contested hearing. This was not a case where the earlier proceedings had been disposed of on any technical ground as was the case in Workmen v. Board of Trustees of the Cochin Port Trust3 and Pujari Bai v. Madan Gopal4.

The “lesser relief” of reinstatement which was the subject­matter of the industrial dispute had already been claimed by the respondent in the writ petition. This was refused by the High Court. The correctness of the decision in the writ proceedings has not been challenged by the respondent. The decision was, therefore, final. Having got an adverse order in the writ petition, it was not open to the respondent to reagitate the issue before the Labour Court and the Labour Court was incompetent to entertain the dispute raised by the respondent and redecide the matter in the face of the earlier decision of the High Court in the writ proceedings.” 16

27. The third case is Executive Engineer, ZP

Engg. Divn. & Anr. vs. Digambara Rao & Ors.,

(2004) 8 SCC 262. In this case also, this Court

placing reliance on the decision in Kulothangan

(supra) reiterated the same view, earlier taken by

this Court in the case of R.C. Tiwari (supra) with

these words:

“15………..It is now well settled that the general principle of res judicata applies to an industrial adjudication.”

28. Now coming to the facts of this case, it is not

in dispute that the issue in relation to reduction of

age from 60 to 58 years was raised by the Trade

Unions/Respondents in the first round of litigation

by filing the original petitions (O.P. Nos.14598,

14599 & 14976/2003) in the Kerala High Court.

These writ petitions were dismissed by the Single

Judge on merits by order dated 12.08.2003. The

respondents/Trade Unions then carried the issue in 17 intra court appeals (No.1565, 1595, 2112 &

2113/2003) before the Division Bench. The appeal

was dismissed by the Division Bench by order

dated 18.12.2003. The Trade Unions/respondents

then filed special leave to appeals in this Court and

by order dated 23.04.2004, this Court dismissed the

SLPs and affirmed the order of the Division Bench.

29. In our view, the effect of passing of these

orders was that the issue in relation to reduction of

age from 60 to 58 years including all incidental

issues arising therefrom, attained finality because

they were already decided on the merits between the

parties to the Lis.

30. In our opinion, no judicial forum at the

instance of any party to the Lis had jurisdiction to

try these issues again on its merits. It was barred

for being tried again by virtue of principles of res

judicata contained in Section 11 of the Code, which

18 has also application to the labour/industrial

proceedings.

31. In our opinion, the State had, therefore, no

jurisdiction to make a reference(s) to the Labour

Court under Section 10 of the ID Act to re­examine

the question of age reduction made by the

appellant(PSU). A fortiori, the Labour Court had no

jurisdiction to entertain the reference(s) to

adjudicate the question(s) referred in the

reference(s).

32. In view of the foregoing discussion, we are of

the considered opinion that the High Court was not

justified in setting aside the awards of the Labour

Court, which had rightly held that it (Labour Court)

had no jurisdiction to entertain the reference and

nor it had the jurisdiction to answer it on merits.

The High Court should have upheld the awards of

the Labour Court.

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33. Once we hold that the references made to the

Labour Court by the State were without jurisdiction,

it is not necessary to examine the merits of the case.

Indeed, it is not legally permissible because it does

not survive for consideration having once decided in

the earlier round of litigation upto this Court which

resulted in termination of the dispute against the

respondents/Trade Unions.

34. In the light of the foregoing discussion, the

appeals succeed and are accordingly allowed. The

impugned order is set aside and the awards of the

Labour Court are restored.

.………...................................J. [ABHAY MANOHAR SAPRE]

…...……..................................J. [INDU MALHOTRA]

New Delhi;

April 11, 2019

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