Siemens Ltd.& Anr vs Siemens Employees Union & Anr

2. This appeal has been preferred from the order dated

12th March, 2010 of the Division Bench of the Bombay

High Court in Letters Patent Appeal No. 30/2010.

1 3. The appellant no. 1 is a public limited company

having its registered office at 130, Pandurang

Budhkar Marg, Dr. Annie Besant Road, Worli, Mumbai

and is engaged in the business of manufacturing

switchgears, switchboards, motors, etc., of its many

factories, one is located at Thane-Belapur Road,

Kalwe, Thane, and houses the plant that manufactures

switchboards for the company. The appellant employs

about 2200 employees. The appellant no. 2 is the

Chief Manager (Personnel) of the said Company.

4. Respondent no. 1, the contesting respondent, is a

registered trade union of the workers employed by

the appellant no.1. It is recognized under the

provisions of the Maharashtra Recognition of Trade

Unions and Prevention of Unfair Labour Practices

Act, 1971 (hereinafter, referred to as the

Maharashtra Act). Respondent no. 2, the pro forma

respondent, represents the Switchboard Unit of the

company, and is responsible for the routine

functioning of the plant at Kalwe.

2 5. In 2007 the trade union preferred a complaint under

Section 28 of the Maharashtra Act for unfair labour

practices, jointly and severally against the

company, its Chief Manager for personnel (appellant

no. 2) and its Works Manager (respondent no.2)

before the learned Industrial Court, Thane,

Maharashtra. The trade union impugned a notification

dated 3rd May, 2007 issued by the company for its

workmen employed in its factory located in Kalwe,

whereby applications were invited to appear for a

selection process to undergo a two year long period

as an `Officer Trainee'. This training was to be in

the fields of manufacturing, quality inspection and

testing, logistics and technical sales order

execution. The notification stated that after the

successful completion of the said two years, the

trainees were to be designated as `Junior Executive

Officers'. The case of the respondent trade union is

that though the designation of `Junior Executive

Officer' was that of an officer belonging to the

management cadre, in fact it was merely a

3

nomenclature, with negligible content of managerial

work. It was urged that the job description of a

Junior Executive Officer was same as that of a

workman, with little additional duties. Resultantly,

the Junior Executive Officers of the factory were

now to do the very same work that had always been

done by the workmen.

6. It was submitted that such a move was, in effect an

alteration in the conditions of service of the

workmen, as some vacancies available for workmen in

the switch board unit were to be reserved for

officers from the management cadre. Resultantly

there would have been a reduction in the job

opportunities for workers. According to the trade

union, any such change could not have been affected

without giving the workmen a prior notice to such

effect in terms of Section 9A of the Industrial

Disputes Act, 1947. In this regard, the trade union

referred to an agreement entered into between itself

and the company in 1982. The said agreement, titled

4

`Rationalization and Transport Settlement' has

clause (7). The said clause is as follows:-

"7. That employees or officer or staff

categories shall not be asked to do normal

production work."

7. The union also referred to clause (12) of the

agreement which is as follows:-

"12. That this settlement shall not be

utilized for eliminating the further

employment potential or promotional

opportunities to the existing workmen."

8. Clause (16) is set out herein below:

"16. This agreement shall come into force

with effect from 01.01.1981 except Clause

No.14 which shall have effect from

16.11.1982 only and shall remain in

operation until it is changed in accordance

with the provisions of law.

9. Clause (7) ensures that the job opportunities for

workers shall not be reduced by the company by

making its managerial staff perform the workmen's

5

job. Clause (16) ensured the perpetuity of this

Settlement until expressly overruled by a subsequent

Settlement. It was submitted by the trade union that

the change sought to be brought about by the company

by its notification dated 3rd May, 2007, was in

violation of clause (7). The trade union thus

complained that the company and its two officers

resorted to unfair labour practices mentioned in

items 9 and 10 of Schedule IV of the Maharashtra

Act, and had thereby violated the mandate of Section

27 of the Maharashtra Act.

10. It was further submitted that even if the said

Settlement was said to be non-binding, the impugned

move was in violation of Section 9A of the

Industrial Disputes Act insofar as the affected

workmen had not been given any notice as

contemplated by clause (a) of Section 9A read with

Entry 11 of the Fourth Schedule of the Industrial

Disputes Act.

6 11. The Maharashtra Act was the first enactment of its

kind in the country to have been legislated by a

State for the prevention of unfair labour practices

and consequent victimization. It was a comprehensive

legislative device to weed out unfair labour

practices, not only on the part of the employers,

but also on the part of trade unions and the

workmen. Chapter VI of the Act is titled `Unfair

Labour Practices'. Section 26, the first section of

this chapter, defines an unfair labour practice for

the purposes of the Act. It reads as under:

"26. Unfair labour practices: In this Act,

unless the context requires otherwise,

`unfair labour practices' mean any of the

practices listed in Schedules II, III and

IV."

12. Section 27 prohibits `unfair trade practices'.

The said Section is as follows:-

"27. Prohibition on engaging in unfair

labour practices: No employer or union and

no employees shall engage in any unfair

labour practice."

7

13. Section 28 deals with the procedure for preferring

a complaint against an unfair labour practice.

Clause (1) of this section reads as follows:

"28. Procedure for dealing with complaints

relating to unfair labour practices: (1)

Where any person has engaged in or is

engaging in any unfair labour practice, then

any union or any employee or any employer or

any Investigating Officer may, within ninety

days of the occurrence of such unfair labour

practice, file a complaint before the Court

competent to deal with such complaint either

under section 5, or as the case may be,

under section 7, of this Act:

Provided that, the Court may entertain

a complaint after the period of ninety days

from the date of the alleged occurrence, if

good and sufficient reasons are shown by the

complainant for the late filing of the

complaint."

14. In the instant case the complaint has been filed

under Section 28 read with Section 30(2) of the

Maharashtra Act by the respondent-union and in the

instant complaint the respondent-union alleged that

the management is indulging in unfair labour

practices under item Nos.9 and 10 of Schedule IV of

the Maharashtra Act (para 3(a) of the complaint).

Schedule IV of the Maharashtra Act categorizes the

general unfair labour practices on the part of the

8

employers. Under Schedule IV, item Nos.9 and 10, in

respect of which unfair labour practices have been

alleged, provide as follows:

"9. Failure to implement award, settlement

or agreement.

10. To indulge in act of force or

violence."

15. In paragraph 3 (b) of the complaint it has been

alleged that the respondent-union is anticipating

that the management is likely to reduce the work of

the workmen category and give it to the newly

recruited officer trainees. It has also been alleged

that by doing so the management is acting in

violation of Section 9(A) of Industrial Disputes

Act, 1947 by bringing about a change in service

condition without giving any notice. In so far as

this allegation in the complaint is concerned, the

order of Industrial Court, Thane, shows that it did

not find that the management was in any way trying

to change the condition of the service or it was

9

acting in violation of the provisions of Section

9(A).

16. The precise findings of the Labour Court, Thane

while dealing with the complaint of the Union about

change of condition of service under Section 9(A) of

the Industrial Disputes Act are as under:

"......Considering the evidence that even

earlier also, the company has reduced the

strength of the employees in various

departments, they were transferred from one

section to other section, the promotions are

given from the category of workmen to the

category of officers and therefore, it

cannot be said that there's any breach under

S.9A of the Industrial Dispute Act, 1947."

17. Therefore, the complaint of the respondent-union,

which ultimately found favour with Industrial Court

as unfair labour practice, is the attempt made by

the management in not implementing clause 7 of

settlement.

10 18. In this aspect the exact finding of the Labour

Court is as follow:

"......Considering the nature of work to be

performed by these Officer's Trainee,

certainly it shows that there's breach of

clause 7 of the Settlement dated 16.11.1982.

As such, the Complainant Union has succeeded

to prove the unfair labour practice under

Item 9 of Schedule IV of the Act."

19. Before proceeding further in this matter, this

Court proposes to examine the concept of unfair

labour practice and the way it has been dealt with

under the Maharashtra Act and also under the ID Act.

Any unfair labour practice within its very concept

must have some elements of arbitrariness and

unreasonableness and if unfair labour practice is

established the same would bring about a violation

of guarantee under Article 14 of the Constitution.

Therefore, it is axiomatic that anyone who alleges

unfair labour practice must plead it specifically

and such allegations must be established properly

before any forum can pronounce on the same. It is

also to be kept in mind that in the changed economic

11

scenario, the concept of unfair labour practice is

also required to be understood in the changed

context. Today every State, which has to don the

mantle of a welfare state, must keep in mind that

twin objectives of industrial peace and economic

justice and the courts and statutory bodies while

deciding what unfair labour practice is must also be

cognizant of the aforesaid twin objects.

20. Unfair labour practice, for the first time, was

defined and codified in the Maharashtra Act referred

to hereinabove. But in so far as the Industrial

Disputes Act, Central Law, is concerned, unfair

labour practice was codified and brought into force

by the Amending Act, 46 of 1982 with effect from 21st

August 1984.

21. Clause (ra) of Section 2 of Industrial Disputes Act

defines unfair labour practice to mean the practices

specified in the fifth schedule and the fifth

schedule was also inserted by the said Amending Act.

12 The fifth schedule has two parts. The first part

refers to unfair labour practices on the part of the

employers and trade union of employers and the

second part refers to unfair labour practices on the

part of the workmen and trade union of workmen.

However, there is some difference between the

provisions relating to unfair labour practices in

the Maharashtra Act and those in Central Act i.e.

Industrial Disputes Act. The Industrial Disputes Act

prohibits an employer or workmen or a trade union

from committing any unfair labour practice while the

Maharashtra Act prohibits an employer or union or an

employee from engaging in any unfair labour

practice. The prohibition under the Industrial

Disputes Act is aimed at preventing the commission

of an unfair labour practice while the Maharashtra

Act mandates that the concerned parties cannot be

engaged in any unfair labour practice. The word

`engage' is more comprehensive in nature as compared

to the word `commit' [See Hindustan Lever Ltd. v.

Ashok Vishnu Kate & others reported in 1995 (6) SCC

326 at para 37, page 345 of the report].

13 22. In the instant case no allegation of victimization

has been made by the respondent-union in its

complaint. In the absence of any allegation of

victimization it is rather difficult to find out a

case of unfair labour practice against the

management in the context of the allegations in the

complaint. It is nobody's case that the management

is punishing any workmen in any manner. It may be

also mentioned here that no workmen of the

appellant-company has made any complaint either to

the management or to the union that the management

is indulging in any act of unfair labour practice.

23. Even then the Labour Court, Thane, has come to

certain findings of unfair labour practice against

the management and which have been referred to

above.

24. The appellant-company challenged the finding of the

Labour Court before the High Court by filing a writ

14

petition. The learned Single Judge in his judgment

noted that the main grievance of the respondent-

union was that in the process of reorganizing its

work pattern the management of the appellant-company

was reducing the number of posts of workmen and some

of the work which were done by the workmen are to be

done by the officers and the grievance of the

respondent-union was that this was contrary to

clause 7 of settlement dated 16th November, 1982

(hereinafter `the said settlement'). Ultimately,

the learned Single Judge came to a finding that

though the post which is introduced by the

management is named Junior Executive, the said post

was different from the post of Junior Executive

which was in existence and after saying so the

learned Single Judge held, "the Tribunal has rightly

held that this amounted to unfair labour practice

under item 9 of Schedule IV of the said Act" (para

9). The learned Single Judge also noted that even

though promoted as Junior Executive the present

workers will be expected to do a part of the work of

the workman along with some additional work. This,

15

according to the learned Single Judge, was in breach

of clause 7 of the said settlement.

25. The appellant-company also challenged the said

order of the learned Single Judge before the

Division Bench. The Division Bench came to a

finding that whatever work is given to the

officers/trainees in addition to the present work

was the work of a workman. So even if the workmen

are promoted they will be doing the job of a workman

with some additional work and the Division Bench

also came to the same finding that this will be in

violation of clause 7 of the agreement and thus

considered it unfair labour practice. With these

findings, the Division Bench affirmed the finding of

the learned Single Judge.

26. Mr. K.K. Venugopal, learned Senior Counsel

appearing on behalf of the respondent-union urged

that in exercise of its powers under Article 136

this Court normally does not interfere with

16

concurrent finding and, therefore, should not

interfere with the concurrent finding in the instant

case.

27. It is true that this Court normally does not upset

a concurrent finding but there is no such inflexible

rule. The jurisdiction of this Court under Article

136 is a special jurisdiction. This is clear from

the text of the Article itself which starts with a

non-obstante clause. This is a jurisdiction

conferring residual power on this Court to do

justice and is to be exercised solely on discretion

to be used by this Court to advance the cause of

justice. This Article does not confer any right of

appeal on any litigant. But it simply clothes this

Court with discretion which is to be exercised in an

appropriate case for ends of justice. Therefore,

there can be no hard and fast rule in the exercise

of this jurisdiction. Just because the findings

which are assailed in a special leave petition are

concurrent cannot debar this Court from exercising

17

its jurisdiction if the demands of justice require

its interference. In a case where the Court finds

that the concurrent finding is based on patently

erroneous appreciation of basic issues involved in

an adjudication, the Court may interfere. In the

instant case the Court proposes to interfere with

the concurrent finding for the reasons discussed

hereinbelow.

28. Admittedly, the finding of unfair labour practice

against the appellant-company by the High Court and

the Labour Court is based on the premise that the

appellant-company acted in breach of clause 7 of the

agreement. It is well known that an industrial

settlement is entered into between the management

and labour for maintaining industrial peace and

harmony. Therefore, any attempt by either the

management or the workmen to violate such a

settlement may lead to industrial unrest and amounts

to an unfair labour practice. Here the charge of

unfair labour practice against the appellant-company

18

is that it has violated item 9 of Schedule IV of the

Maharashtra Act. Item 9 has been set out

hereinabove and the purport of item 9 is that any

failure to implement an award or settlement or

agreement would be an unfair labour practice. In

the instant case while considering clause 7 of the

said settlement the Courts have not taken into

consideration clause 12. Both clauses 7 and 12 have

been set out hereinabove. If a harmonious reading

is made of clauses 7 and 12 it will be clear that

clause 7 cannot be given an interpretation which

makes clause 12 totally redundant. Clause 7

contains a prohibition against the employees or

officers or members of the staff of the appellant-

company from doing normal production work. But that

cannot be read in such a manner as to nullify the

purport of clause 12 which reserves the promotional

employment potential of existing workmen. So in the

instant case if by way of rearrangement of work, the

management of the appellant-company gives

promotional opportunity to the existing worker that

does not bring about any violation of clause 7 of

19

the said settlement rather such a rearrangement of

work will be in terms of clause 12. At the same

time if some of job of executive officers are the

same as is done by the existing worker that does not

bring about such a violation of clause 7 as to

constitute unfair labour practice.

29. What is restricted under clause 7 is asking the

officers to do the normal production work. There is

no blanket ban in asking the officers from doing any

production work. Therefore, both clause 7 and

clause 12 of the said settlement must be reasonably

and harmoniously construed to make it workable with

the evolving work culture of the appellant-company

in facing the new challenge in the emerging economic

order which has changed considerably from 1982.

Even if we assume that 1982 agreement still subsists

even then when a challenge is made of unfair labour

practice on the basis of violation of a clause of

1982 agreement on the basis of a complaint filed in

2007, the Labour Court and the High Court must

20

consider the said agreement reasonably and

harmoniously keeping in mind the vast changes in

economic and industrial scenario and the new

challenges which the appellant-company has to face

in the matter of reorganizing work in order to keep

pace with the changed work culture in the context of

scientific and technological development. This

Court also finds that while adjudicating on the

complaint of the union both the Labour Court and the

High Court should have taken into consideration all

subsequent settlements between the management of the

said company and the union in 1985, 1988, 1992, 1997

and 2004. Both the Labour Court and the High Court

failed to notice that in its complaint the union has

accepted that they are not objecting to the

promotion being granted to the workers. However,

the said stand of the workers union is not

consistent with the nature of the complaint filed

before the Labour Court.

21 30. The admitted facts are, there are 89 vacancies in

the category of officers and 154 workers have

applied. Therefore, everybody who has applied cannot

be promoted, only a certain percentage of the

workers applying can be promoted. Both the Labour

Court and the High court failed to take into

consideration that the workers voluntarily applied

for the promotion scheme pursuant to its

introduction. Nowhere has it been alleged by the

workers that any force or pressure was brought upon

them to apply. In the background of these facts the

question is when the workers applied on their own to

a scheme of promotion introduced by the management

and they do not make any complaint either to the

union or to the management in respect of the

introduction of the scheme, can it be said that by

introducing a promotional scheme the management is

indulging in unfair labour practice? The union is

supposed to represent the interests of the workers.

When the workers themselves do not consider the

scheme as unfair to them, can the union take upon

them the burden of saying that the scheme is unfair?

22 In the instant case the respondent-union is

unfortunately seeking to do that. Both the Labour

Court and the High Court have failed to appreciate

this basic fundamental issue in their adjudication

and have, therefore, come to an obviously erroneous

finding. Apart from the aforesaid clear factual

position legally also the management of the company

is not prevented from rearranging its business in

the manner it considers it best, if in the process

it does not indulge in victimisation.

31. Reference in this connection may be made to a

decision of this Court in Parry & Co. Ltd. v.

P.C.

Pal & ors., reported in AIR 1970 SC 1334, a

three-Judge Bench of this Court held as follows:-

"It is well established that it is

within the managerial discretion of an

employer to organize and arrange his

business in the manner he considers best.

So long as that is done bona fide it is not

competent of a tribunal to question its

propriety. If a scheme for such

reorganization results in surplusage of

employees no employer is expected to carry

the burden of such economic dead weight and

retrenchment has to be accepted as

inevitable, however unfortunate it is..."

23

(para 14, page 1341 of the report)

32. In the instant case no malafide has been alleged

against the appellant-company. Nor it is anybody's

case that as a result of reorganization of its

working pattern by introducing the scheme of

promotion any person is either retrenched or is

rendered surplus.

33. In the given situation, this Court cannot

appreciate how by introducing the scheme of

promotion to which the workers overwhelmingly

responded on their own can it be said that the

management has indulged in unfair labour practice.

34. Similarly, in the case of Hindustan Lever Ltd. v.

Ram Mohan Ray and others reported in 1973 (4) SCC

141, another three-Judge Bench of this Court held

that nationalization and standardization of work by

24

the management by itself would not fall under item

10 of Schedule IV of Industrial Disputes Act unless

it is likely to lead to retrenchment of workers.

Relying on the decision in Parry (supra) this Court

held in Hindustan Liver (supra) that since the

reorganization has not brought about any change

adversely affecting the workers and there has been

no retrenchment, similar principles are applicable

here.

35. Mr. K.K. Venugopal, learned Senior Counsel appearing

for the union in support of his submission relied on

a decision of this Court in the case of Arkal Govind

Raj Rao v. Ciba Geigy of India Ltd., Bombay reported

in 1985 (3) SCC 371. In that case the question

which was considered by this Court was where an

employee was performing multifarious duties and the

issue is whether he is a workman or not the test to

be applied is what was the primary, basic or

dominant nature of the duties for which the workman

was employed. This Court came to the conclusion

25

that when the primary and basic duties of an

employee are clerical but certain stray assignments

are given to him to create confusion, the Court may

remove the gloss to find out the reality.

36. In Arkal Govind Raj (supra) the aforesaid question

arose out of the termination of service of the

appellant Govind Raj as his termination led to an

industrial dispute. In that dispute numerous

primary objections were raised by Ciba Geigy and one

of them was that Govind Raj was not a workman within

the meaning of Section 2(s) of the Industrial

Disputes Act. In that context, this Court, after

analyzing the evidence, came to a finding that

Govind Raj was a workman within the meaning of the

Act and held that neither the Labour Court nor the

High Court came to a correct finding. With that

finding this Court remanded the matter to the Labour

Court for deciding the dispute in accordance with

its judgment. The said decision has no bearing on

the issues with which we are concerned in this case.

26 It is well known that the ratio of a decision has to

be appreciated in its context. Going by that

principle, we do not find that the decision in Arkal

Govind Raj (supra) is of any assistance to the

respondents.

37. Mr. Venugopal also relied on the commentary of K.D.

Srivastava on Law Relating to Trade Unions and

Unfair Labour Practices in India (Fourth Edition).

The learned counsel relied on a decision of the

Allahabad High Court in the case of L.H. Sugar

Factories and Oil Mills (P) Ltd., v. State of U.P.,

(1961) 1 LLJ 686 (HC All). Some of the observations

made in the said judgment which have been quoted in

the commentary of K.D. Srivastava are as follows:-

"...If an employer deliberately uses his power

of promoting employees in a manner

calculated to sow discord among his workmen,

or to undermine the strength of their union,

he is guilty of unfair labour practice."

(page 402)

27

38. In the instant case no malafide has been alleged by

the union against the appellant-company in the

matter of reorganization of its work. It is also

nobody's case that as a result of the reorganization

of the work any attempt is made by the appellant-

company to create discord amongst the workmen so as

to undermine the strength of the union. Apart from

that the facts in the case of L.H. Sugar Factories

(supra) are totally different. In L.H. Sugar

Factories (supra) the company wrongfully deprived

ten workers of their promotion to the post of

driver-cum-assistant fitter while preferring eleven

other workmen over them. This led to an industrial

dispute. Therefore, those observations of Allahabad

High Court in a totally different fact situation are

not attracted in the present case to make out a case

of unfair labour practice. We fail to appreciate

the relevance of the aforesaid decision to the facts

of the present case.

28 39. At the same time it is not the case of the

respondent-union that its recognition is in any way

being withdrawn or tinkered with. Nor is it the

case of the respondent-union that it is losing its

power of collective bargaining. It may be that the

number of workmen is reduced to some extent pursuant

to a promotional scheme to which the workmen readily

responded. But no union can insist that all the

workmen must remain workmen perpetually otherwise it

would be an unfair labour practice. Workmen have a

right to get promotion and improve their lot if the

management offers them with a bona fide chance to do

so. In fact if the order of the High Court is

upheld, the same will go against the interest of

erstwhile workmen of the appellant-company who have

responded to the scheme of promotion.

40. For the reasons aforesaid, we are of the view that

the High court failed to have a correct perspective

of the questions involved in this case and obviously

came to an erroneous finding.

29 41. We allow the appeal and set aside the order of the

High Court in which has merged the order of the

Labour Court. However, we make it clear that in

implementing the scheme the management of the

appellant-company must not bring about any

retrenchment of the workmen nor should the workmen

be rendered surplus in any way.

42. The appeal is, thus, allowed. There will be no

order as to cost.

.......................J.

(D.K. JAIN)

.......................J.

New Delhi (ASOK KUMAR GANGULY)

October 12, 2011

30