1. In Application, bearing B.I.R. Case No.22 of 1998, filed by the ten employees of the petitioner-Company in the Labour Court on 21-2-1998, the provisions of Section 42 read with Items 1, 2, 4 and 5 under Schedule II of the Bombay Industrial Relations Act, 1946 were invoked alleging their transfer from Polyester Department to Spurn Yarn Department amounted to illegal change , as defined under sub-section (15) of Section 3 of the Bombay Industrial Relations Act. The Labour Court, by its judgment and order dated 5-12-2006, allowed the said application and passed an order, the operative portion of which, is reproduced below:
1. The application filed by the applicants is allowed.
2. The non-applicant is directed to give original work to the applicants in the Polyester utility department and give all consequential benefits from the date of illegal change made by the nonapplicant i.e. 2.10.98.
3. No order as to cost.
The Industrial Court dismissed Appeal (BIR) No.1 of 2007 by its judgment and order dated 9-4-2008. Hence, the employer is before this Court in this petition.
2. On 17-1-2008, this petition was admitted, granting interim relief in terms of prayer clause (iii) of the petition, staying the judgments and orders passed by both the Courts below.
3. The basic question before the Courts below was whether the employees were working in the Polyester Department, engaged in the activities of manufacturing of polyester fibres, such as PSF, POY and Polyester Chips, or were working in the Utility Department, providing services of water supply, repairs and maintenance of refrigeration, air-conditioning and humidification to various Production Departments, like Polyester Department, Spurn Yarn Department, and Drought Texturized Yarn (DTY) Manufacturing Department. The case of the employees was that they were working in the Polyester Department, whereas, according to the employer, they were working in the Utility Department. The transfer of employees to Spurn Yarn Department in the month of October 1998 was not disputed. The another question involved was whether by such transfer there was reduction in the number of employees working in the Polyester Department and increase in the number of employees in the Spurn Yarn Department by way of rationalisation, adversely affecting the incentives and privileges, attracting the provisions of Items 1, 2, 4 and 7 under Schedule II, requiring a notice of change to be given under Section 42 of the Bombay Industrial Relations Act. The employer raised a plea before the Courts below that as a result of acceptance of the Scheme of Demerger under Sections 390 and 394 of the Companies Act, 1956 by the Delhi High Court and the Madhya Pradesh High Court, the Spurn Yarn Department was transferred to newly formed Company, viz. Indorama Textile Ltd., with effect from 1-4-2002, and the said Company not having been joined as the party-respondent in the proceedings, the employees are not entitled to any relief against the present employer.
4. The Courts below have taken a view that the employees were working in the Utility Department, which was not involved in the functioning of production, but the wages of the employees were drawn or debited to the activities of Polyester Department, and hence the employees were working in the Polyester Utility Department. The Labour Court has held that the transfer of employees to Spurn Yarn Department attracts Items 1, 2 and 4 of Schedule II of the Bombay Industrial Relations Act, as it amounted to illegal change of reduction in the strength of employees in the Polyester Department and increase in the strength of employees in the Spurn Yarn Department in violation of sub-section (1) of Section 42 of the Bombay Industrial Relations Act, whereas the Industrial Court holds that the illegal change attracts Items 1, 2, 7 and 9 of Schedule II. The Courts below have held that after the transfer, the wages of the employees were debited in the account of Spurn Yarn Department. The transfer of employees has resulted in causing reduction in privileges, concessions in the matter of promotions, increments and wages. On the aspect of demerger, the Labour Court holds that there was no change in the conditions of service of the employees upon demerger, whereas the Industrial Court holds that the position prevailing in the month of October 1998 has to be considered and, therefore, the event of demerger is of no consequence.
5. In para 12 of the judgment of the Labour Court, a finding is recorded that the employees were appointed and confirmed in the Utility Department, and the Industrial Court records a finding in para 23 of its judgment that the employees were not working in the Polyester Department. According to Shri Puranik, the learned counsel for the petitioner-employer, such findings of the Courts below are based upon the orders of appointment, the letters of confirmation, the identity cards, and the oral evidence of witness Dushyankumar Sanadhya, examined by the employees, and witness Rajesh Nayak, examined by the employer. He submits that in the absence of there being any separate Department, like Polyester Utility Department, the Courts below have committed an error in holding that the employees were working in such Department. He further submits that merely because the wages payable to the employees were debited in the account of Polyester Department, would not mean that the employees were appointed in the Polyester Department.
6. Shri Puranik has invited my attention to the provision of Item 2 under Schedule III of the Bombay Industrial Relations Act, dealing with assignment of work and transfer of workers within the establishment and submits that at the most, the transfer in question would attract such Item, and being an interdepartmental transfer, would not attract the provision of sub-section (1) of Section 42 of the said Act so as to require the notice of change to be given to the employees. He has relied upon the decision of the Apex Court in the case of Ashok K. Jha and others v. Garden Silk Mills Limited and another, reported in (2009) 10 SCC 584.
7. Shri Puranik further submits that necessary facts leading to attract the Items under Schedule II of the said Act have neither been pleaded nor the evidence has been led to make out a case requiring the notice of change to be given, as required by sub-section (1) of Section 42 of the said Act. He submits that at any rate, in view of the subsequent change in accepting the Scheme by the two High Courts, the employees are not entitled to be taken back in service, as they have become the employees of another Company, viz. Indorama Textile Ltd. According to him, the relief granted by the Labour Court has become infructuous and cannot be implemented.
8. Shri Autkar, the learned counsel for the respondent-employees, has solely relied upon the findings recorded by both the Courts below and urged that all the contentions raised by Shri Puranik, the learned counsel for the petitioner-employer, have been dealt with, and in recording the concurrent findings of fact, there is no perversity or illegality committed by the Courts below, requiring interference in exercise of extra ordinary writ jurisdiction by this Court.
9. The undisputed factual position available on records needs to be considered first. The establishment of the petitioner-Company consisted of three Production Departments (i) Polyester Department, engaged in the manufacturing of polyester fibres PSF, POY and Polyester Chips, (ii) Drought Texturized Yarn (DTY) Manufacturing Department, and (iii) Spurn Yarn Department, manufacturing synthetic yarn. Apart from these three Production Departments, there were other supporting Departments, such as Utility Department, Administrative Department, Finance Department, etc. The function of the Utility Department is to provide water, humidification, repairs and maintenance of refrigeration and air conditioning, etc. to the aforesaid three Production Departments. The Spurn Yarn Department was situated on the eastern side, whereas the Polyester and DTY Departments were situated on the western side. The administrative office of the Utility Department was situated on the western side near the Polyester Department. All the employees in the Utility Department were required to enter the premises of the Company through Gate No.3 to mark their attendance by punching their cards prior to October 1998. Thereafter, the applicant-employees were asked to enter the premises of the factory through Gate No.2 along with the employees working in the Spurn Yarn Department. This has given a rise to filing of an application under Sections 78 and 79 of the Bombay Industrial Relations Act before the Labour Court, out of which the present petition arises. The application was filed by the ten employees, who were appointed during the period from 9-10-1993 to 2-9-1996 on the posts of Technical Assistant, Assistant Filter, and Assistant Operator/Filter.
10. Before proceeding to consider the findings recorded by the Courts below, certain provisions of the Bombay Industrial Relations Act need to be considered. Section 42 of the said Act deals with the notice of change, and sub-sections (1), (2) and (4) therein being relevant, are reproduced below:
42. Notice of change (1) Any employer intending to effect any change in respect of an industrial matter specified in Schedule II shall give notice of such intention in the prescribed form to the representative of employees. He shall send a copy of such notice to the Chief Conciliator, the Conciliator for the industry concerned for the local area, the Registrar, the Labour Officer and such other person as may be prescribed. He shall also affix copy of such notice at a conspicuous place on the premises where the employees affected by the change are employed for work and at such other place as may be directed by the Chief Conciliator in any particular case.
(2) Any employee desiring a change in respect of an industrial matter not specified in Schedule I or III give a notice in the prescribed form to the employer through the representatives of employees, who shall forward a copy of the notice to the Chief Conciliator, the Conciliator for the industry concerned for the local area, the Registrar, the Labour Officer and such other person as may be prescribed.
(4) Any employee or a representative union desiring a change in respect of (i) any order passed by the employer under standing orders, or (ii) any industrial matter arising out of the application or interpretation of standing orders, or (iii) an industrial matter specified in Schedule III, except item (5) thereof shall make an application to the Labour Court and as respects change desired in any industrial matter specified in item 5 of Schedule III, to the Industrial Court.
In terms of the aforesaid provision, any employer intending to effect any change in respect of the industrial matter specified in Schedule II has to give a notice of such intention in the prescribed form to the representative of employees. In terms of sub-section (4) of Section 42, any employee or a representative union desiring a change in respect of an industrial matter specified in Schedule III, has to make an application to the Labour Court.
11. Schedule II under Section 42, consisting of Items 1 to 11, being relevant, is reproduced below:
SCHEDULE II
(Section 42)
1. Reduction intended to be of permanent or semi-permanent character in the number of persons employed or to be employed in any occupation or process of department or departments or in a shift not due to force majeure.
2. Permanent or semi-permanent increase in the number of persons employed or to be employed in any occupation or process or department or departments.
3. Dismissal of any employee except as provided for in the standing orders applicable under this Act.
4. Rationalisation or other efficiency system of work, whether by way of experiment or otherwise.
5. All matters pertaining to shift working which are not covered by the Standing Orders applicable under this Act.
6. Withdrawal of recognition to unions of employees.
7. Withdrawal of any customary concession or privilege or change in usage.
8. Introduction of new rules of discipline or alteration or existing rules and their interpretation, except in so far as they are provided for in the standing orders applicable under this Act.
9. Wages including the period and mode of payment.
10. Hours of work and rest intervals.
11. All matters pertaining to leave and holidays, other than those specified in items 6 and 7 in Schedule I.
Sub-section (4) of Section 46 of the Bombay Industrial Relations Act provides that no employer shall make any change in any industrial matters mentioned in Schedule II before giving notice of change, as required by the provision of sub-section (1) of Section 42 and any change made in contravention of the provisions of sub-sections (1), (2) or (3) shall be illegal.
12. The mandatory nature of the provision of sub-section (1) of Section 42 of the Bombay Industrial Relations Act is apparent, as sub-section (4) of Section 46 provides the consequences of the violation of sub-section (1) of Section 42 to declare the change as illegal. The operation of sub-section (1) of Section 42 is, however, restricted to the items specified in Schedule II. If the case is not covered by any one or more items specified in Schedule II, but is covered by any of the items specified in Schedule I or III, then the provision of sub-section (1) of Section 42 is not attracted, and such an intention of the legislature is clear from the language employed under sub-section (2) of Section 42 of the said Act.
13. The question of assignment of work and transfer of workers within the establishment is governed by Item 2 under Schedule III of the Bombay Industrial Relations Act, which is reproduced below.
SCHEDULE III
(Section 42)
(2) Assignment of work and transfer of workers within the establishment.
In the decision of the Apex Court in case of Ashok K. Jha and others v. Garden Silk Mills Limited and another, reported in (2009) 10 SCC 584, the question considered was whether the transfer of employees from one Department to another within the same establishment and assignment of work to them attracts Items 1 and 2 of Schedule II of the Bombay Industrial Relations Act, was considered. The view taken by the Industrial Court that the transfer of employees from one Department to another in the same establishment would be a change under Items 1 and 2 of Schedule II of the said Act in the absence of there being a counter-exchange of work between such two Departments was set aside by the Division Bench of the High Court and the same was confirmed by the Apex Court.
14. In paras 21 and 22 of the said decision, the Apex Court has held as under:
"21. A close look at Items 1 and 2 of Schedule II and Item 2 of Schedule III would show that insofar as assignment of work and transfer of workers within the establishment is concerned, the subject is precisely and specifically covered by Item 2 of Schedule III. The expression "assignment of work and transfer of workers within the establishment" is plain and admits of no ambiguity. If the orders of transfer are of the description mentioned in Item 2 of Schedule III, Item 2 of Schedule III must come into full play. Items 1 and 2 of Schedule II operate altogether in a different field.
22. Basically, Items 1 and 2 of Schedule II deal with reduction in the number of persons employed or to be employed in any occupation or process or department or departments or in a shift or permanent or semi-permanent increase in the number of persons employed or to be employed in any occupation or process or department or departments. A mere transfer of workers within the establishment would not attract Item 1 and 2 of Schedule II but would be covered by Item 2 of Schedule III as there is a specific item in this regard. A specific item would exclude the items of general character and, in that view of the matter, in the matters of transfer of workers within the establishment and assignment of work by the employer, the specific Item 2 of Schedule III is attracted". It is thus apparent that the Apex Court has made a distinction between Items 1 and 2 of Schedule II dealing with the reduction in the number of persons employed or to be employed in any occupation or process or Department or Departments and the transfer of workers within the establishment under Item 2 of Schedule III. It has been held that mere transfer of workers within the establishment would not attract Items 1 and 2 of Schedule II, but it would be covered by Item 2 of Schedule III, which is a specific item in this regard. It is held that the specific item would exclude the items of general character and therefore, in the matter of transfer of workers within the establishment and assignment of work by the employer, the specific Item 2 of Schedule III is attracted. Apart from this, in my view, the reduction in the number of persons in one Department and increase in the number of persons in another Department as a result of inter-departmental transfer by itself would not be covered by Items 1 and 2 in Schedule II of the Bombay Industrial Relations Act, unless it is shown that any one or more other item in Schedule II are attracted.
15. Once the Labour Court records a finding in para 12 of its judgment that the employees were appointed and confirmed in the Utility Department and the Industrial Court records a finding in para 23 of its judgment that the employees were not working in the Polyester Department, I have no hesitation to accept the contention of Shri Puranik that in the absence of there being any separate Department, like Polyester Utility Department , the Courts below have committed an error in holding that the employees were working in such Department. Even if it is assumed on the basis of cost code debiting the salary of the employees in the Utility Department to the Polyester Department that such employees were given jobs to be performed in the Polyester Department, the assignment of work in the Spurn Yarn Department from the month of October 1998 or the transfer of such employees for the purposes of job in the Spurn Yarn Department would attract Item 2 in Schedule III, which would not attract the provision of sub-section (1) of Section 42 of the Bombay Industrial Relations Act, requiring a notice of change to be given, and such a change cannot be said to be an illegal change , as contemplated by sub-section (4) of Section 46 of the said Act.
16. It is not the case that the transfer of the employees from one Department to another in the same establishment was not a condition of service. There is absolutely no evidence on record to suggest what were the concessions, privileges or benefits enjoyed by the employees in the Utility Department, which have been reduced or changed by their transfer in the Spurn Yarn Department. Shri Dushyantkumar Sanadhya, the only witness examined by the employees, has stated in his cross-examination as under:
... After October 1998 my salary was reduced upto Rs.500/-. I have filed pay slip of October 1998 it is at Ex.39. I have not filed the pay slip of November 1998 and onwards. I told to my Counsel that after October 1998 my salary was reduced up to Rs.500/-. I was explained the contents of the complaint by my counsel before making signature. I cannot assign any reason why not mentioned in my complaint that my salary was reduced by Rs.500/-. I know that in the month of April 97, there was agreement and elected representatives. It is true that as per agreement basic pay and other allowances were fixed. It is true that Oct.98 basic pay, special pay, washing allowance, medical allowance, attendance allowance were not reduced. It is true that the production incentive is depending upon the production. It is not true to say that there were no changes in service conditions after Oct.98.
In the pleadings, there is no basis for leading the aforesaid evidence. The reduction in production incentives depends upon the production, and it cannot be said that there was reduction in the wages paid to the employees.
17. In the additional affidavit filed before this Court by the employees, the employees have stated in para 2 as under:
2. It is most respectfully stated that there is change in conditions of service and the change continued since the date of their transfer and is continuing till date. It is to be noted that the agreement executed between Indo Rama Synthetics (I) Ltd. and the representatives of employees of Indo Rama Synthetics Ltd. which includes agreement on several points including medical allowance, washing allowance, production incentive etc. The agreement clearly reveals that the production incentive applicable to the employees on 01/01/1999 would be different from polyester DTY cum spinning. It was agreed by the said agreement that promotion policy would not differ. The production incentive which was to be dependent on production in particular unit namely Polyester DTY and Spinning. However, in the month of October, November, December, 1998 a production incentive of Rs.450/was agreed to all employees of three units. However, from Jan, 1999 it was agreed that production incentive would vary from department to department. A copy of the said agreement executed between the petitioner and the representatives of the employees is marked and annexed hereto as Annexure-R1. It is relevant to note that agreements were executed between the petitioner company and the presentatives of the employees from time to time and the agreement executed for Spinning unit for 20-05-2007 is marked and annexed hereto as Annexure-R2 and the agreement for the period 20-08-2010 is marked and annexed hereto as Annexure-R2(i). As against the agreement executed between the petitioner company and its employees in Polyester department for 20-05-2007 is marked and annexed hereto as Annexure-R3 and for the period of 20-08-2010 is marked and annexed hereto as Annexure-R3(i). ...
The employees are talking about the incentives made applicable from 1-1-1999, whereas the application before the Labour Court was filed in the month of December 1998. The employees have entered into the settlement and the aforesaid averment is the outcome of such settlement between the employer and the representative-Union. The same is of no consequence for determination of reduction in the concessions, privileges or benefits available to the employees prior to their alleged transfer.
18. Once it is held that the assignment of work and transfer of employees is covered by Item 2 of Schedule III under the Bombay Industrial Relations Act, the question of attracting the provisions of Items 1 and 2 of Schedule II under the said Act does not at all arise and it has to be held that there was no necessity to issue a notice of change, as required by sub-section (1) of Section 42 of the said Act. The Scheme of Demerger under Sections 390 and 394 of the Companies Act, 1956 has already been approved by the Court of competent jurisdiction and the Spurn Yarn Department in which the employees were working has been transferred to the newly formed Company, viz. Indorama Textile Ltd., with effect on 1-4-2002. The Courts below have recorded the finding that such action was not the subject-matter of challenge and that there was no change in the conditions of service of the employees upon transfer to Indorama Textile Ltd. The said Company was not joined as the party-respondent in the application under Sections 78 and 79 of the Bombay Industrial Relations Act and, therefore, it is not possible to permit the implementation of the decision of the Labour Court directing the petitioner to give original work to the employees in the Polyester Utility Department along with all consequential benefits. The Courts below have adopted misdirected approach to the controversy involved in the case. The judgments and orders passed by the Courts below cannot, therefore, be sustained.
19. In the result, the petition is allowed. The judgments and orders dated 5-12-2006 passed by the Labour Court in Application, bearing B.I.R. Case No.22 of 1998; and dated 9-4-2008 passed by the Industrial Court in Appeal (BIR) No.1 of 2007, are hereby quashed and set aside. Application, bearing B.I.R. Case No.22 of 1998, filed by the respondent-employees is dismissed.
20. Rule is made absolute in above terms. No order as to costs.