Peico Electronics and Electricals Ltd. Vs. C.S. Baj, Member, Industrial Court and Philips Employees Union - Court Judgment

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labour and industrial - collective bargaining - section 26 of maharashtra recognition of trade unions and prevention of unfair labour practices act, 1971 - order directing company to furnish copy of memorandum of understanding to union challenged - company refused to bargain collectively in good faith - union justified in insisting on fair and effective furnishing of information so as to have meaningful collective bargaining - petitioners erred in not responding reasonably to legitimate demand of union - impugned order justified. - - failed. 6. the industrial court has taken the view that matters complained of, do come within the four corners of the statute, and that a complaint would be maintainable. ultimately, it came to the conclusion that the union was justified in its contention that the respondent company refused to bargain collectively, in good faith, as contemplated by item 5. 8. the question whether there had been an omission to have a collective bargaining in good faith, has to be assessed in the light of various averments contained in the complaint. it is difficult to overcome the averments contained in the complaint, in paragraph 3(c), 3(e), 3(j), 3(l) and 3(m). as to how the interest of the employees are adversely affected is attempted to be demonstrated in paragraph 3(1). the union had put on record, through a series of letters, its stand and position on this question. i am clearly of the view that the matters referred to in the complaint would squarely come within item 5 of schedule ii. an alert union would be well advised to guard against such sly siphoning of corporate assets, having their adverse impact on the interest of the workmen. it suffices for the purpose of this case to note that the union was well advised in seeking a bargaining relating to this transaction. i am not satisfied that the prayer for stay should be granted having regard to the totality of the circumstances. the principles of civil law have been accepted in relation to the working of the tribunals as well the question is one of balancing of the various considerations so as to enable the court to have a correct decision by effective means. ) trade secrets would otherwise be exposed to undesirable circulation with disastrous consequences for the employer. industrial relations have been subjected to serious studies and strong views -some opposing each other -have been expressed by sociologists like elliot jacques, alan bandus and hugh clcgg. information is never 'neutral',and unions will have to learn how to cope with company accounts and formulate effective information strategic so as best to form their own views of their employer's past and future performance. ' 18. in the present case, that is what the union attempted and that is precisely what the management endeavoured to defeat. the overview of current trends, would only go to confirm a conviction that the view taken by the labour court is realistic, imaginative, intelligent, and in tune with the current trends in the industrial relations. and that precisely is the approach this court should uphold.k. sukumaran, j. 1. n.v. philips gloeilampenfabrieken, eindhoven, the netherlands had executed a memorandum of understanding (m.o.u) with tatas in 1989. it appears to have touched the capital structure of peico electronics & electricals ltd., a company operating over four decades, (the petitioner herein) wherein philips (holland) hold 39.7% of the shares & financial institutions hold 24.8 % and the balance 25.5 % by the public. the petitioner had admittedly moved the controller of capital issues in july 1991. there was an amendment on september 25, 1991. it sought issue of fully convertible debentures of rs, 28.29 crores and non-convertible debentures of rs. 5 crores. a special resolution approved the special resolution for the issue of debentures as aforesaid. in december, 1991 the union wrote to the controller expressing their apprehension about an alleged attempt by tatas to have a back door entry into the core of this corporate entity. it was alleged that the premium amount of debenture issue was rs. 15/- whereas the marker price was +/- rs. 175/-. the government guidelines stipulated that employees be allotted 5% of the total issue. the complaint is that they received only 1.4%. this is contrasted with the past conduct of the company which had allotted 6.95% in 1972, 6.4% in 1979 and 5% in 1986. according to the union, when confronted with correspondence, the company had sought to justify the issue by linking it with m.o.u. the union felt that the m.o.u. contains clauses detrimental to the interest of the union. it is in that context that the union sought a copy of it by letter dated january 17, 1992 and otherwise. negotiations for getting a copy of the m.o.u. failed. the union then filed exhibit 'c' complaint before the industrial court, bombay as complaint (ulp) 336 of 1992.2. the union filed the complaint, under section 26 read with item 5 of schedule ii of the maharashtra recognition of trade unions and prevention of unfair labour practices act, 1971.3. the management opposed it (vide exhibit 'd' dated march 11, 1982). it passed the impugned order - exhibit 'e' dated april 2, 1992. thereunder, the industrial court directed the company to furnish to the union a copy of the m.o.u. as also the full information regarding the proposed issue of convertible debentures and non-convertible debentures as required by the union.4. the petitioner-company has approached this court seeking a relief of invalidation of order passed by the industrial court, exhibit 'e', dated april 2, 1992.5. there is no dispute that the union is a recognised one or that it had negotiations with the company, and for a long time, in relation to matters directly affecting the interest of the employees. the current complaint is also not characterised as malicious by the management. that aspect has been repeatedly emphasised in the order of industrial court.6. the industrial court has taken the view that matters complained of, do come within the four corners of the statute, and that a complaint would be maintainable. it observed, and rightly in my opinion, that at this juncture, it is not necessary to express any views on the allegation of illegality of any actions on the part of the respondent.7. the industrial court considered the provisions of section 26 of the act, and the scope of item 5 of schedule ii thereof. ultimately, it came to the conclusion that the union was justified in its contention that the respondent company refused to bargain collectively, in good faith, as contemplated by item 5.8. the question whether there had been an omission to have a collective bargaining in good faith, has to be assessed in the light of various averments contained in the complaint. counsel for the petitioner took me through the complaint, exhibit 'c' exhaustively, and with critical comments. it is difficult to overcome the averments contained in the complaint, in paragraph 3(c), 3(e), 3(j), 3(l) and 3(m). as to how the interest of the employees are adversely affected is attempted to be demonstrated in paragraph 3(1). the union had put on record, through a series of letters, its stand and position on this question. i am clearly of the view that the matters referred to in the complaint would squarely come within item 5 of schedule ii. that is the finding of the industrial court. it is fully supported by the materials on record. no other view appears to be possible in the circumstances. even if the view taken by the industrial court is one of the possible views, a constitutional court will not interfere with the findings on an issue of that nature.9. an attempt was made to show that the m.o.u. arrived at between the two entities, should not be taken as legitimately falling within the scope of either item 5 and that an order directing the production of the m.o.u. should not have been passed, particularly when the company had always demonstrated its preparedness to negotiate with the union and has so negotiated in the past. the contention cannot be accepted, for, the submission only reflects too simplistic a view in the matter. diverse are the ways by which the corporate veil is utilised for carrying out dishonest transactions. (it is not to be implied that any imputation is made in the present case). the trend is visible from the pages of history. noel an-non refers to the emerging phenomenon of corporate entities in the victorial era. and corporate fraud happened to flourish along with it. dicken' s son was so distressed with the ugly manipulations of companies that he openly declared his disinclination to be connected with the corporate activities. a seemingly simple transaction can, in given circumstances, have repercussions on the interest of a company. the company can be made anaemic and succumb to strains and drains, ultimately. that will affect the interests of the employees. even an anaemic character of a healthy company can affect adversely the future prospects of the employees. an alert union would be well advised to guard against such sly siphoning of corporate assets, having their adverse impact on the interest of the workmen. if the unions have sought a discussion with the management, a fair and full discussion, on the matters so vital to the interest of the workmen, that cannot be discouraged by a court of law, much less by a constitutional court.10. at this juncture, it may be useful to take note of the happenings in the trade union segment as measures taken to protect the interest of employees, in the united kingdom. the case law of that country would indicate that trade unions which have been functioning there with greater equipment and enlightenment, have not been slow in the protection of the rights of the employees, and to seek for and obtain from the management many industrial information, some of them even falling within the sensitive area of manufacturing secrets. it suffices for the purpose of this case to note that the union was well advised in seeking a bargaining relating to this transaction. the petitioner cannot wash off its hands by saying that the transaction was between two strange entities, when it had applied for and obtained permission of the capital issue in the background of the self same transaction. viewed from whatever angle, this is a matter in respect of which the union was justified in insisting on a fair and effective furnishing of information so as to have a meaningful collective bargaining. the petitioner erred in not responding reasonably to that legitimate demand of the union. the unions, characteristically enough, in stronger words than necessary, attributed to the management corporate manipulations of an immoral character. there may be a wisp of truth in the allegations. the existence of corporate exercises is not denied. whether the allegation is correct or not can be known only when full information is available.the union was justified in filing the complaint before the labour court. the opinion of the industrial court that the union was justified in filing the complaint and the directive it has given cannot be faulted in the circumstances. i am, therefore, of the view that the writ petition is misconceived. it is accordingly, dismissed.a prayer was made for stay of the order of the industrial court. i am not satisfied that the prayer for stay should be granted having regard to the totality of the circumstances. that prayer is declined.11. even under (he procedure governing civil litigation, discovery and inspection of documents, is an important tool for aiding the parties in assisting the courts to arrive at the truth. in the context of the utilisation of such enabling procedural provisions, attempts at fishing information have always been discouraged. the principles of civil law have been accepted in relation to the working of the tribunals as well the question is one of balancing of the various considerations so as to enable the court to have a correct decision by effective means.12. the existence of confidential documents in any industrial undertaking, would create problems more sensitive than in an ordinary civil litigation, where it could be one seeking a repayment of money or recovery of an item immovable property. the necessity of protecting such rights on confidentiality or secrecy, had been emphasised by courts and tribunals, though secrecy as a defence is extremely attenuated for a modern state. (the decision of the supreme court in s.p. gupta's case : [1982]2scr365 has been referred to by the labour court in its order.) trade secrets would otherwise be exposed to undesirable circulation with disastrous consequences for the employer. the court should not compel the disclosure of such sensitive information to the union in given circumstances. this approach has further to be modulated by taking note of the evolution of new relationships in industrial area. industrial relations have been subjected to serious studies and strong views - some opposing each other - have been expressed by sociologists like elliot jacques, alan bandus and hugh clcgg.13. the employer has to be realistic in his approach, and be alive to modern conditions. white v. university of manchester 1976 icr 419, stresses the importance of a non-legalistic approach of the tribunals. the orders are not made as a matter of routine procedure. when the party seeking information shows that it will be prejudiced without such information, the tribunal may compel disclosure of the information. the attitude that a clear and pragmatic employer should adopt in such situation is indicated in selwyn's law of employment, fourth edition, page 255:'from a practical point of view, the employer should recognise that there are a number of matters within his knowledge which the tribunal may wish to learn about, and therefore should be prepared to give evidence on these matters.'14. we have noticed that philips india has its roots in netherlands and netherlands is the country which has produced a genius in industrial relation, mr. henk vredeling, who was responsible for launching in 1980 the draft directive on the information and consultation of workers to the council of ministers. the various developments in the industrial field, including the recent report of the bullock committee, and the white paper of 1979 in england, are important land marks in this area. we are passing through times when representation of trade unions on board of directors is welcomed atleast by some as 'novel institution .... of confliction partnership.'15. the draft directive on the information and consultation of workers issued by the commission of european communities in 1980, would open a new vista for sensible survey of novel developments in this exciting area of human relations. an article by christopher docksey (administrator, director- general for employment, social affairs and education of the commission of the european communities), is exceedingly helpful to carry with us the background information. (see 1986 49 mlr 281). it furnishes an incisive analysis and attractive synthesis of problems which are inter-wined between the warp and woof of differing threads and differing patterns as furnished by the capital and the labour. the heart of the directive was referred to as 'the effective and genuine communication with the employees on the situation of the undertaking and on decisions which may affect them.'16. according to the draft, a proposition which has serious consequences for the workforce should be preceded by a consultation with the trade union. the very characterisation of information as confidential is with the object that the information is not disclosed to other parties by the representatives of the employees. the information which could be claimed by the employees under the draft, is '.... information which enables the employee representatives to obtain a true and fair view of the performance of the entity or, where appropriate, the enterprise as a whole.' it is not, however, the trivial information that need be furnished under the draft. it is limited to matters of serious interest to employees on the past and future running of the undertaking. some are retrospective, as for example, the economic and financial situation. some are prospective such as foreseeable development of the business, and of production mid sales, the employment situation and foreseeable threats, and investment prospect.the progress of the company's affairs, would be of interest to labour.17. even with all such positive provisions in the objects of the statute book, the management with its expertise and sophistication, and deft handling of its affairs, could defeat the purpose of such disclosure by certain means. docksey acknowledges this when he states:'bluntly, the information the works would require could be buried under a huge mass of technical documentation.'he points out:'information is never 'neutral', and unions will have to learn how to cope with company accounts and formulate effective information strategic so as best to form their own views of their employer's past and future performance.'18. in the present case, that is what the union attempted and that is precisely what the management endeavoured to defeat. the management has now to realise that consultation with the employee representatives, is a healthy exercise for a prosperous concern. there is much wisdom in the observation of docksey:'the consultation itself lies midway on a continuum between negotiation and codelermination. it affects the area of unilateral decision making by management, and has to be supported by management goodwill to be properly effective.'the management has been somewhat insulted in relation to disclosure of sensitive information which causes substantial injury to the employer's undertaking.19. the confidentiality exemption under the law of england, it was feared, 'would drive a 'coach horses' through the disclosure procedure'. the exemption, possibly is consistent with a caution and sophistication practised by that nation: martini should be stirred but not bruised. it cannot be said that in the present case there is any such substantial injury to the undertaking by a disclosure of the memorandum of understanding. the overview of current trends, would only go to confirm a conviction that the view taken by the labour court is realistic, imaginative, intelligent, and in tune with the current trends in the industrial relations. noel an-non in his book 'our age' observes:'the people's enemies are the civil servants, sophisticated individuals & businessmen who use the rule of law and convention to defeat popular control.'courts by imaginative approaches can help managements to modulate their approaches in such a way as to take matters to a breaking point. that will in turn help the managements from being portrayed in nasty colours. that is what the labour court did. and that precisely is the approach this court should uphold.