M/S. Divgi Metal Wares Ltd. vs M/S. Divgi Metal Wares Employees Association & Anr.

2024 INSC 237 REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO(S). 2032/2011

M/S. DIVGI METAL WARES LTD. …APPELLANT(S)

VERSUS

M/S. DIVGI METAL WARES EMPLOYEES ASSOCIATION & ANR. …RESPONDENT(S)

WITH C.A. NO. 2035/2011 C.A. NO. 2033/2011

JUDGMENT

B.R. GAVAI, J.

1. These appeals challenge the judgment and order passed

by the Division Bench of the High Court of Karnataka, Circuit

Bench at Dharwad dated 02.02.2009, vide which the appeal

filed by the M/s. Divgi Metal Wares Employees Association, Signature Not Verified

Narendra Prasad Date: 2024.03.21 which is respondent No.1 herein, came to be allowed. Digitally signed by 12:57:14 IST Reason:

Similarly, by the said order, the Writ Petition No.31808/2003

1 filed by Respondent No.1 was also allowed and the Writ Petition

No.7993/2006 filed by M/s Divgi Metal Wares Ltd., the

appellant herein, came to be dismissed.

2. The facts leading to the filing of the present appeals are

as under:-

2.1 The appellant is a company which manufactures

automobile gears at two factories, one in Pune, Maharashtra

and the other at Sirsi, Karnataka. The Respondent No.1 is a

Trade Union registered under the provisions of the Indian

Trade Unions Act, 1926. The relations between the appellant

and the respondents are governed by the Industrial

Employment (Standing Orders) Act, 1946 (for short, ‘the said

Act’). It is also not in dispute that, it was at the instance of the

employer that the Deputy Labour Commissioner and Certifying

Officer passed an order on 03.07.1989 thereby certifying the

Standing Order. Clause 20 of the Standing Orders reads thus:-

“20. Transfers: An employee shall be liable to be transferred at any time from the unit/factory/office/establishment of the company located anywhere in India or from one department to another within the same unit/factory/office/establishment or from one job of similar nature and capacity to another job of same nature and capacity from one job to another similar job or from one shift to another shift, provided such a 2 transfer does not affect his normal wages.

Any refusal to accept a transfer as above will be treated as mis-conduct as per Rule 31.2.1949.”

2.2 It will also be relevant to refer to Clause 31 of the Certified

Standing Order. It reads thus:

“Nothing contained in these standing Orders shall operate in derogation of any law for the time being in force or to the prejudice of any right under a contract of service, custom or usage, or an agreement settlement or award applicable to the establishment.”

2.3 It is also not in dispute that Clause 5 of every letter of

appointment and Clause 1 of every letter of confirmation in

service issued to the workmen contains the following

stipulation:-

“Your services are transferable at short notice to any department or any works, offices belonging to the Company. In the event of transfer the terms and conditions stipulated in this letter shall continue to apply, and you will be governed by the rules and regulations of the establishment where your services are transferred.”

2.4 The appeal challenging the Certified Standing Order

dated 03.07.1989 came to be filed before the learned Industrial

Tribunal which rejected the appeal as time barred vide order

dated 06.04.1996. Indisputably, the same order has not been

carried forward.

3 2.5 In the months of April to September, 1998 on account of

reduction in orders and lack of sufficient work, 66 workmen

from the Sirsi Factory were transferred to Pune Factory. All

the workmen were paid in advance for one week’s leave with

pay @ Rs.1,000/- towards travel expenses. Though the

employees collected the said amount, they did not report at the

Pune Factory.

2.6 These workmen, whose services were transferred raised

Industrial Disputes vide Nos.42/1998, 2/1999 and 3/1999.

2.7 On the application of the respondent, the Deputy Labour

Commissioner and Certifying Officer modified the Certified

Standing Orders and deleted the following words from Clause

1 on 30.09.1999:-

“from the unit/factory/office/establishment in which he is working to any other unit/factory /office/establishment of the Company located anywhere in India, or”

2.8 The said deletion came to be challenged by way of an

appeal by the appellant before the learned Industrial Tribunal.

The learned Industrial Tribunal by the judgment and order

dated 03.03.2001 partly allowed the appeal and set aside the

modifications to the Standing Order of 3rd July, 1989. The

same came to be challenged by the respondent by way of Writ 4 Petition No.44810/2001.

2.9 In the meanwhile, the learned Industrial Tribunal, Hubli

vide its common award, rejected the aforesaid three references,

viz., ID Nos. 2/1999, 3/1999 and 42/1998 filed by the

workmen on 30.05.2002. The Tribunal also held that the

transfers were not malafide. A Writ Petition No.31808/2003

was filed before the High Court by the respondents challenging

the said award dated 30.05.2002.

2.10 In parallel proceedings, 03 workmen who were similarly

transferred on 08.02.1999 raised Reference ID no.220/2001

and 16 workmen who had been earlier transferred on

27.04.1998 raised the Reference ID No.9/2002.

2.11 These references were allowed by the learned Industrial

Tribunal at Hubli vide award dated 28.02.2006 leading to filing

of Writ Petition No.7993/2006 by the present appellant before

the learned Single Judge of the Karnataka High Court.

2.12 In the meanwhile, the learned Single Judge dismissed the

Writ Petition No.44810/2001 filed by the respondents vide

order dated 20.03.2006, which led to filing of Writ Appeal

No.877/2006 before the Division Bench of the High Court. The

learned Judges of the Division Bench, while hearing the

5 appeal, also called for the papers of the aforesaid two writ

petitions which were pending before the learned Single Judge

and passed the order as aforesaid.

3. We have heard Shri C.U. Singh, learned senior counsel

for the appellant and Shri S.G. Hasnen, learned senior counsel

appearing for the respondents.

4. Shri C.U. Singh submits that, the reasoning of the

Division Bench to the effect that since the Schedule of the said

Act does not contain provisions with regard to transfer and

therefore the 1999 amendment itself was not tenable is without

substance. He further submits that, as per Section 3 of the

said Act, though for every item in the Schedule a provision has

to be made in the Standing Order, there is no restriction for

providing of additional items. He further submits that, in view

of provisions of Section 7 read with Section 10(3), the modified

Standing Order would have taken effect only after the period of

seven days from the date on which the copies of the order of

the Appellate Authority are sent to the employer and to the

trade union or other prescribed representatives of the

workmen under sub-Section (2) of Section 6 of the said Act. It

is submitted that the 1999 modification was challenged by way

6 of an appeal and the said appeal was dismissed. The writ

petition challenging the said appellate order was also

dismissed and therefore during the period in which the

transfers were made, it was the Standing Orders certified on

03.07.1989, which were in vogue.

5. Shri Singh further submits that, even if the words from

Clause 20 as were directed to be deleted by the amendment of

30.09.1999; still, in view of the law laid down by this Court in

the case of Cipla Ltd. vs Jayakumar R. and Another1, the

transfer of workmen from Sirsi Factory to Pune Factory could

not be interfered.

6. Learned counsel for the respondents, on the contrary

submits that, learned Judges of the Division Bench have

rightly held that there was no power to provide stipulation for

transfer in the Standing Order and therefore, the Division

Bench of the Karnataka High Court has rightly held the 1999

amendment to be unsustainable.

7. We find that, for deciding the present appeal, it would not

be necessary for us to address the first two issues raised by

Shri C.U. Singh, inasmuch as, even for the sake of argument

1 (1999) 1 SCC 300 7 if it is accepted that the words directed to be deleted by the

amendment of 30.09.1999 are deleted from Clause 20, still in

view of the law laid down by this Court in the case of Cipla

Ltd. (supra) the transfers could not have been held to be

invalid.

8. It will be relevant to refer to paragraph 3 of the judgment

of this Court in the case of Cipla Ltd. (supra), which refers to

Clause 3 and Clause 11 of the terms of appointment. It reads

thus:

“3. Briefly stated the facts are that the respondent was appointed as a mechanic by a letter of appointment dated 31-1-1983 in the appellant's establishment at Bangalore. Two of the terms of appointment which are relevant for the purposes of the present case namely clause 3 and clause 11 are as follows:

Clause 3:

You will be in full time employment with the Company. You are required to work at the Company's establishment at Bangalore or at any of its establishments in India as the Company may direct without being entitled to any extra remuneration. You shall have to carry out such duties as are assigned to you, diligently and during such hours as may be stipulated by the management from time to time. While you are in service, you shall not be employed elsewhere or have any interest in any trade or business. Clause 11:

8 You will be governed by the Standing Orders applicable for workmen of the Company, a copy of which is attached for your reference.”

9. It will also be relevant to refer to paragraph 9 of the

judgment of this Court in the case of Cipla Ltd. (supra),

wherein the argument on behalf of the employee and the

relevant clause in the Standing Order applicable to the parties

have been reproduced. It reads thus:

“9. It was vehemently contended by the learned counsel for the respondent that notwithstanding the aforesaid clause 3 in the letter of appointment the position in law is that if there is any clause which is in conflict with the Standing Orders then the Standing Orders must prevail. It was submitted that clause 11 of the letter of appointment clearly stipulated that the Standing Orders would be applicable. The learned counsel drew our attention to the relevant clause in the Standing Orders which reads as follows:

“A workman may be transferred from one department to another, or from one section to another or from one shift to another within factory/Agricultural Research Farm, provided such transfers do not involve a reduction in his emoluments and grade. Worker who refuses such transfers are liable to be discharged.”

10. In the said case, it was sought to be argued on behalf of

the employees that when the Standing Order talks of transfer,

it permits the transfer only in terms of the said clause and

9 transfer de hors the same was not permissible. The argument

was accepted by the learned Single Judge as well as the

Division Bench of the High Court. While reversing the order of

the learned Single Judge this Court observed thus:-

“12. In our opinion, the aforesaid construction does not flow from the provisions of the Standing Orders when read along with the letter of appointment and, therefore, the conclusion arrived at by the High Court was not correct. As has already been noticed the letter of appointment contains both the terms namely for the respondent being transferable from Bangalore as well as with regard to the applicability of the Standing Orders. These clauses, namely, Clauses 3 and 11 have to be read along with the Standing Orders, the relevant portion of which has been quoted hereinabove. Reading the three together we do not find that there is any conflict as has been sought to be canvassed by the learned Counsel for the respondent. Whereas the Standing Orders provide for the department wherein a workman may be asked to work within the establishment itself at Bangalore, Clause 3 of the letter of appointment, on the other hand, gives the right to the appellant to transfer a workman from the establishment at Bangalore to any other establishment of the Company in India. Therefore, as long as the respondent was serving at Bangalore he could be transferred from one department to another only in accordance with the provisions of the Standing Orders but the Standing Orders do not in any way refer to or prohibit the transfer of a workman from one establishment of the appellant to another. There is thus no conflict between the said clauses.” 10

11. It could thus be seen that, this Court has clearly held

that, when Clauses 3 and 11 of the appointment order are read

alongwith the Standing Order, there is no conflict as was

sought to be canvassed by the employee. It has been held that,

whereas the Standing Orders provided for the department

wherein a workman may be asked to work within the

establishment itself in Bangalore, Clause 3 of the letter of

appointment, on the other hand, gives the right to the employer

to transfer a workman from the establishment at Bangalore to

any other establishment of the Company in India. It has been

held that the Standing Order does not in any way refer to or

prohibit the transfer of a workman from one establishment of

the appellant to another and thus, there is no conflict between

the said clauses.

12. The terms of appointment, which fell for consideration of

this Court in the case of Cipla Ltd. (supra) are almost similar

to the terms of the appointment in the appointment order as

well as the confirmation order in the present case. They clearly

stipulate that the services are transferable to any department

or any work offices belonging to the company. It is further

11 clarified that; upon transfer, the terms and conditions

stipulated in the appointment order would continue to apply

and the employees would be governed by the rules and

regulations of the employment where his/her services are

transferred.

13. Even for a moment if it is accepted that the reasoning of

the Division Bench that the amendment to clause 20 of the

Standing Order by order dated 30.09.1999 is not permissible;

still, in view of the law laid down by this Court in the case of

Cipla Ltd. (supra), it would make no difference. If the

reasoning of the Division Bench is accepted, Clause 20 would

read as under:-

“20. Transfers: An employee shall be liable to be transferred at any time from one department to another within the same unit/factory/office/establishment or from one job of similar nature and capacity to another job of same nature and capacity from one job to another similar job or from one shift to another shift, provided such a transfer does not affect his normal wages. Any refusal to accept a transfer as above will be treated as mis- conduct as per Rule 31.2.1949.”

14. If that be so, the clause in the Standing Order would be

similar with the clause that fell for consideration before this

Court in the case of Cipla Ltd. (supra), and as such, there 12 would be no conflict between the Standing Order and the terms

and conditions as stipulated in the order of

appointment/confirmation. Whereas the Standing Order

would cover the transfer from one department to another

within the same unit/factory/office/establishment or from one

job of similar nature and capacity to another job of same

nature and capacity and also from one job to another similar

job or from one shift to another shift. Per contra, the terms of

appointment and confirmation would permit the transfer of an

employee to any department or any works or offices belonging

to the company. Another aspect that needs to be taken into

consideration is that clause 31 of the Schedule of the Standing

Order, which is reproduced herein above specifically provides

that nothing contained in the Standing Order shall operate in

derogation of any law for the time being in force or cause

prejudice to any right under contract of service, custom or

usage or an agreement, settlement or award applicable to the

establishment. It can thus be seen that nothing contained in

the Standing Orders can operate in derogation or to the

prejudice of the provisions as provided in the contract of

service.

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15. In this view of the matter, we find that the Division Bench

has erred in allowing the writ petition of the respondents,

thereby holding the transfers to be illegal. Similarly, the

learned Division Bench also erred in dismissing the writ

petition filed by the appellants herein, which was filed

challenging the award dated 28.02.2006. It is to be noted that

the said award was totally contrary to the earlier award passed

by the very same Tribunal on 30.05.2001.

16. For the aforesaid reasons, we find that the impugned

judgment and order is not sustainable. However, we clarify

that we have not considered the larger issue with regard to

power of modification of the standing order and leave it open

to be adjudicated in an appropriate proceeding. We find that

the learned Division Bench was in error in calling the writ

petitions filed by the appellant as well as the respondent(s) and

deciding them without even discussing the reasonings as were

adopted by the learned Tribunal. It is to be noted that, in the

first order dated 30.05.2002, the learned Industrial Tribunal

apart from holding that in view of Clause 20 and in terms of

appointment and confirmation orders, the challenge to the

transfer orders was not sustainable, also after discussing the

14 entire material on record, found that the transfers were not

mala fide.

17. The award dated 28.02.2006 only considers that Clause

20 stood modified on 30.09.1999 and as such the transfer

orders were not permissible. However, the award passed in

2006 fails to take into consideration that on 03.03.2001, the

appeal against the modification was partly allowed by the

learned Industrial Tribunal setting aside the order dated

30.09.1999.

18. It will be relevant to refer to Section 7 of the said Act. It

reads thus:

“7. Date of operation of standing orders.- Standing orders shall, unless an appeal is preferred under Section 6, come into operation on the expiry of thirty days from the date on which authenticated copies thereof are sent under sub-section (3) of Section 5, or where an appeal as aforesaid is preferred, on the expiry of seven days from the date on which copies of the order of the appellate authority are sent under sub-section (2) of Section 6”

19. It could thus be seen that, in view of the provisions of

Section 7, the Standing Orders shall come into operation on

the expiry of 30 days from the date on which the authenticated

copies thereof are sent under sub-section (3) or Section 5.

15 However, where an appeal, as provided under sub-section (2)

of Section 6 is preferred, the same would come into operation

only upon the expiry of seven days from the date on which

copies of the order of the appellate authority are sent. Section

10 of the said Act deals with the duration and modification of

standing orders.

20. It will also be relevant to refer to sub-section (3) of Section

10 of the said Act, which reads thus:

“10. Duration and modification of standing orders.-

(3) The foregoing provisions of this Act shall apply in respect of an application under sub- section (2) as they apply to the certification of the first standing orders.”

21. It could be seen from the perusal thereof that all

foregoing provisions including the provision in Section 7 of the

said Act would also apply in respect of the application under

sub-section (2) as they apply to certification of the first

Standing Order. As such, in view of the order dated

03.03.2001 passed by the learned Industrial Tribunal, the

amendment made in the year 1999 had not come into effect in

view of the appeal being allowed by the learned Tribunal.

22. We therefore find that, on the date of the orders of

16 transfer as well as the date on which the learned Industrial

Tribunal passed the award dated 28.02.2006, it is the

03.07.1989 Standing Order which would be in operation. More

so when the appeal challenging the same by the respondents

came to be dismissed on 06.04.1996 and which order was not

carried further by the respondents.

23. We further find that the learned Division Bench has also

erred in not taking into consideration the law laid down by this

Court in the case of Cipla Ltd. (supra) though the said

judgment was specifically cited before it.

24. In the result, the impugned judgment and order is

quashed and set aside. Writ Appeal No. 877 of 2006 filed by

the respondent No.1 is dismissed. The order dated 20.03.2006

passed by the learned single judge in Writ Petition No. 44810

of 2001 is upheld. Writ Petition No.31808/2003 filed by the

respondent No.1 is dismissed. Writ Petition No.7993/2006

filed by the appellant is allowed. The order passed by the

learned Tribunal dated 28.02.2006 is quashed and set aside.

However, we clarify that we have not considered the larger

issue with regard to the powers of the Certifying Officer to

provide a clause in the Standing Orders, reserving the power

17 of the employer to transfer its employees anywhere in India.

25. In our view, in view of the law laid down by this Court in

the case of Cipla Ltd. (supra), it was not necessary for the

Division Bench to go into the said issue, inasmuch as the facts

of the case at hand, are squarely covered by Cipla Ltd. (supra).

26. The appeals are disposed of in the aforesaid terms. There

shall be no orders as to costs.

27. Pending application(s), if any, shall stand disposed of.

..............................J (B.R. GAVAI)

..............................J (SANDEEP MEHTA)

NEW DELHI;

MARCH 21, 2024

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