# MUKAND LTD v. MUKAND STAFF AND OFFICERS' ASSOCIATION

- **Citation:** [2004] 2 S.C.R. 951
- **Court:** Supreme Court of India
- **Decided:** 2004
- **Case number:** Civil Appeal No. 5601 of 2001
- **Bench:** Y.K. Sabharwal, Dr. Ar. Lakshmanan
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/mukand-ltd-v-mukand-staff-and-officers-association-19814
- **Pages:** 46

## Headnote

B
Industrial Disputes Act, I947-Sections JO, 2(s) and 2(k)-Industrial
Dispute-Reference to Tribunal-Scope of-Whether can cover non-workmen
also-Reference of dispute between the Company and Staff Association to the C
Tribunal-Staff Association comprising also of non-workmen-Tribunal making
award in favour of non-workmen too-Held, not permissible.
Industrial Disputes Act, 1947-Section 2(k)-Any person-Meaning ofWorkmen espousing cause of non-workmen-Permissibility of-Workmen and
non-workmen working in the same grade-Industrial dispute between the D
Company and Assocjation of workmen and non-workmen-Dispute referred to
Tribunal-Tribunal granting award in favour of both workmen as well as
non-workmen-Association claiming that workmen and non-workmen belonging
to same grade had community of interest and workmen could espouse the
cause of non-workmen-Held, only workmen entitled to relief from the
Tribunal-Industrial Disputes Act, 1947-Section 18.
E
Evidence Act, 1872-Section 31-Estoppel-Plea of-Held, cannot be
raised when not pleaded-Settlement between Company and Staff AssociationStaff Association comprising both workmen and non-workmen-Settlement
providing that the agreement was without prejudice to the right of the parties F
to claim that some staff members were not workmen-Benefit given by Company
to all-Dispute between parties-Dispute referred to Tribunal-Held, there
cannot be any estoppel against the Company from claiming that non-workmen
were not entitled to benefit of award-Industrial Disputes Act, 1947-Section
2(k).
In 1974 and 1982, the appellant-Company and the respondentAssociation concluded settlements relating to the welfare scheme and
service conditions of the employees of the appellant. In 1989 the appellant
entered into another settlement with the respondent-Association in respect
of certain benefits to be given to the members of the respondentG
951
H
952
SUPREME COURT REPORTS
[2004] 2 S.C.R.
A Association. As the respondent-Association consisted of several members
who were, according to the appellant, not "workman" under the provisions
of the Industrial Disputes Act, the settlement stated that there was dispute
between the parties as to the status of substantial number of staff not being
workmen under the Industrial Disputes Act. The settlement was made
B without prejudice to the rights and contentions of both parties.
c
In 1991, the respondent served a Charter of Demands on the
appellant. The efforts for conciliation failed and the Government referred
the dispute between the appellant and the workmen employed under them
for adjudication to the Industrial Tribunal.
Before the Industrial Tribunal, the appellant contended that a large
number of staff were not workmen under Section 2(s) of the Industrial
Disputes Act and therefore, no award should be made in their favour. The
appellant filed the designations and the categories of employees who were
not workmen under the Industrial Disputes Act. The appellant also
D contented that the financial condition of the appellant was not sound. In
E
F
•
the Statement of Claim filed by the respondent there was no averment to
the effect that there was community of interest between the workmen and
the non-workmen or that the appellant was estopped from claiming
exclusion of workmen in view of the settlements between the parties.
The Industrial Tribunal in its award held that the appellant was
estopped from contending that the employees were not workmen and
granted all major demands of the respondent. The Tribunal linked the
allowances payable to the workmen to their basic pay and de-linked it from
their respective grades.
The appellant filed writ petition before the High Court. Before the
High Court, the appellant filed further material to show that it was in dire
financial position. The Single Judge held that there was community of
interest between the workmen and non-workmen and they belonged to the
same class as they had worked and functioned in the same grades and
G therefore,

## Text

_Characters 0–39,879 of 112,015. This is a partial read: ask again with offset=39879 for what follows._

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MUKAND LTD.
A
v.
MUKAND STAFF AND OFFICERS' ASSOCIATION
MARCH I 0, 2004
[Y.K. SABHARWAL AND DR. AR. LAKSHMANAN, JJ.]
B
Industrial Disputes Act, I947-Sections JO, 2(s) and 2(k)-Industrial
Dispute-Reference to Tribunal-Scope of-Whether can cover non-workmen
also-Reference of dispute between the Company and Staff Association to the C
Tribunal-Staff Association comprising also of non-workmen-Tribunal making
award in favour of non-workmen too-Held, not permissible.
Industrial Disputes Act, 1947-Section 2(k)-Any person-Meaning ofWorkmen espousing cause of non-workmen-Permissibility of-Workmen and
non-workmen working in the same grade-Industrial dispute between the D
Company and Assocjation of workmen and non-workmen-Dispute referred to
Tribunal-Tribunal granting award in favour of both workmen as well as
non-workmen-Association claiming that workmen and non-workmen belonging
to same grade had community of interest and workmen could espouse the
cause of non-workmen-Held, only workmen entitled to relief from the
Tribunal-Industrial Disputes Act, 1947-Section 18.
E
Evidence Act, 1872-Section 31-Estoppel-Plea of-Held, cannot be
raised when not pleaded-Settlement between Company and Staff AssociationStaff Association comprising both workmen and non-workmen-Settlement
providing that the agreement was without prejudice to the right of the parties F
to claim that some staff members were not workmen-Benefit given by Company
to all-Dispute between parties-Dispute referred to Tribunal-Held, there
cannot be any estoppel against the Company from claiming that non-workmen
were not entitled to benefit of award-Industrial Disputes Act, 1947-Section
2(k).
In 1974 and 1982, the appellant-Company and the respondentAssociation concluded settlements relating to the welfare scheme and
service conditions of the employees of the appellant. In 1989 the appellant
entered into another settlement with the respondent-Association in respect
of certain benefits to be given to the members of the respondentG
951
H
952
SUPREME COURT REPORTS
[2004] 2 S.C.R.
A Association. As the respondent-Association consisted of several members
who were, according to the appellant, not "workman" under the provisions
of the Industrial Disputes Act, the settlement stated that there was dispute
between the parties as to the status of substantial number of staff not being
workmen under the Industrial Disputes Act. The settlement was made
B without prejudice to the rights and contentions of both parties.
c
In 1991, the respondent served a Charter of Demands on the
appellant. The efforts for conciliation failed and the Government referred
the dispute between the appellant and the workmen employed under them
for adjudication to the Industrial Tribunal.
Before the Industrial Tribunal, the appellant contended that a large
number of staff were not workmen under Section 2(s) of the Industrial
Disputes Act and therefore, no award should be made in their favour. The
appellant filed the designations and the categories of employees who were
not workmen under the Industrial Disputes Act. The appellant also
D contented that the financial condition of the appellant was not sound. In
E
F
•
the Statement of Claim filed by the respondent there was no averment to
the effect that there was community of interest between the workmen and
the non-workmen or that the appellant was estopped from claiming
exclusion of workmen in view of the settlements between the parties.
The Industrial Tribunal in its award held that the appellant was
estopped from contending that the employees were not workmen and
granted all major demands of the respondent. The Tribunal linked the
allowances payable to the workmen to their basic pay and de-linked it from
their respective grades.
The appellant filed writ petition before the High Court. Before the
High Court, the appellant filed further material to show that it was in dire
financial position. The Single Judge held that there was community of
interest between the workmen and non-workmen and they belonged to the
same class as they had worked and functioned in the same grades and
G therefore, the non-workmen could not be excluded from the ambit of the
Reference. The Single Judge further held that the workmen could espouse
the cause of the non-workmen. The Single Judge however, disallowed one
component of dearness allowance, namely, basic linked variable dearness
allowance. He confirmed all other increases in emoluments as.granted by
the Industrial Tribunal.
H
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I
MUKAND LTD. v. MUKAND STAFF AND OFFICERS' ASSON.
953
-·
The appellant as well as the respondent filed appeals before the A
Division Bench. The appellant filed its annual report showing losses to the
company. The Division Bench held that there was community of interest
between the workmen and the non-workmen and that the workmen could
raise a dispute regarding the service conditions of non-workmen. The
Division Bench partially modified the order of the Single Judge in respect B
of dearness allowance, gratuity etc.
---
The appellant and the respondent filed appeals by way of special
leave petitions before the Court. The respondent, contended, inter alia, that
the Court under Article 136 of the Constitution of India should not
interfere with the finding of facts arrived at by the Industrial Tribunal. c
Allowing the appeal of the appellant and dismissing the appeal of
the respondent and remitting matter back to the Industrial Tribunal for
adjudication, the Court
HELD: 1.1. The dispute referred to by the order of Reference is only D
in respect of workmen employed by the appellant. It is clear that the
Industrial Tribunal, being a creature of the Reference, cannot adjudicate
matters not within the purview of the dispute actually referred to it by
the order of Reference. The Industrial Tribunal could not have adjudicated
the issues of the salaries of the employees who are not workmen under
the Industrial Disputes Act nor could it have covered such employees by E
its award. Even ifthe Reference covered the non-workmen, the Industrial
Tribunal, acting within its jurisdiction under the Industrial Disputes Act,
could not have adjudicated the dispute insofar as it related to the nonworkmen. [967-D-F]
1.2. The present award can be made effective and enforceable in F
--
respect of only the workmen under Section 18 of the Industrial Disputes
Act. The contention of the respondent that the phrase "any person"
employed in Section 2(k) and Section 18 of the Industrial Disputes Act
covers non-workmen is not correct. The non·workmen were not necessary
parties. It is not the contention of the respondent that the Industrial G
Tribunal, after considering the material before it, arrived at a finding that
the non.workmen are a necessary party to the Reference or that it
complied with the requirement of issuing summons to the non-workmen
-·
under Section 18 of the Industrial Disputes Act. [970·G]
Dimakuchi Tea Estate v. Management of Dimakuchi Tea Estate, [1958) H
954
SUPREME COURT REPORTS
(2004] 2 S.C.R.
A SCR l 156; Anil Kumar Upadhyaya v. P. K. Sarkar and qrs., (1961) 2 LLJ
459; Hochtief Gammon v. Industrial Tribunal, Orrisa, (1964) 2 LLJ 460; P. ·
G. Brookes v. Industrial Tribunal, (1953) 2 LLJ l; Raadhakrishna Mills ltd.,
Coimbatore v. Special Industrial Tribunal, Madras and Ors., (1954) 1 LLJ
459; Narendra Kumar Sen, AIR (1953) Bombay 325; Reserve Bank of India,
B 119961 1 SCR 25 and The Workmen v. Greaves Cotton Company limited,
1197 l I 2 sec 658, referred to.
2.1. The finding of the High Court that 'workmen' and 'nonworkmen' belong to the same class is erroneous. The question of class to
which the employees belonged is to be decided not on the basis of grades
C in which they are placed but on the basis of their duties, responsibilities
and powers as laid down in Section 2(s) of the Industrial Disputes Act.
Workmen as well as non-workmen being in the same grade does not imply
that the distinction between the two categories ceased to exist, or that they
belonged to the same class. [972-A-B; 994-E]
D
2.2. The Industrial Tribunal totally side-stepped the evidence led by
the parties in respect of the duties, responsibilities and power of the
employees on the ground that the appellant is estopped from raising the
issue of the status of the employee. The employer and the employees by
their conduct in concluding settlements in the past could not create for,
or confer upon, an adjudicating authority jurisdiction, where none existed.
E This apart, the employer had not waived his right to raise the issue of the
status of the employees under the Industrial Disputes Act in any of the
settlements. The employer cannot be held to have waived his rights
regarding the issue of the status of the employees under the Industrial
Disputes Act in the absence of any of the settlements concluded by them
F with the employees. The Division Bench has also ignored the cumulative
effect of the Settlements of 1989 and 1995 which were concluded between
the parties without prejudice to their respective rights and contentions on
the status of the employees under the Industrial disputes Act.
[972-C; 980-B-C; 984-C)
G
3.1. Disputes can be raised only by the workmen with the employer.
H
The workmen, however, can in appropriate cases espouse the cause of nonworkmen if there is community of interest between the workmen and the
non-workmen. (967-F-G]
3.2. In the instant case, it is an admitted fact that the community of
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MUKAND LTD. v. MUKAND STAFF AND OFFICERS' ASSON.
955
interest or estoppel has never been pleaded and the finding rendered by A
the High Court on this issue is in the absence of pleadings. If the nonworkmen are given the status and protection available to the workmen, it
would mean that the entire machinery and procedure of the Industrial
Disputes Act would apply to the non-workmen with regard to their
employment/non-employment, the terms of the employment, the conditions B
of Labour etc. This would cast on the appellan'. th·~ onerous burden of
compliance with the provisions of the Industrial Disputes Act in respect
of non-workmen. Such situation is not envisage_d by th·~ Industrial Disputes
Act which is only designed to protect the interests of the workmen as
defined in Section 2(s) of the Industrial Disputes Act. (985-A-CJ
3.3. There were no pleadings either on the issue of 'community of
interest' or on the issue of 'estoppel' in the Statement of Claim filed by
the respondent before the Industrial Tribunal. The findings rendered
regarding 'community of interest' or 'estoppel' in absence of pleadings
c
by the respondent, cannot at all be looked into. The Division Bench has
erred in holding that there is a community of interest between the D
workmen and the non-workmen and holding further that the workmen
can place a dispute regarding the service conditions of non-workmen. This
reasoning, in the absence of any pleading regarding the community of
interest is fallacious. (973-E; 980-D-E]
Bandar Singh and ,Ors. v. Nihal Singh and Ors., [2003] 4 SCC 161, E
relied upon.
4.1. The material that was placed before the Industrial Tribunal was
not considered or discussed and there was, as such, no adjudication by
the Industrial Tribunal. The whole award of the Industrial Tribunal is F
lia6Ie to be set aside on the ground of non-application of mind by the
Industrial Tribunal to the material on record. It was not open to the High
Court, in exercise of writ jurisdiction, to modify an award which, at its
very basis, was flawed as it lacked proper application of fundamentals of
wage adjudication. [979-G; 980-E]
4.2. The Industrial Tribunal has exceeded its jurisdiction. It has
embarked upon an enquiry against non-workmen and, therefore, the
decision of the Industrial Tribunal is a non-compliance with the provisions
0
of the Industrial Tribunal Act. Therefore, the determination by an
Industrial Tribunal on the question other than the one which Statute
directed to decide, would be a decision not under the provisions of the f
956
SUPREME COURT REPORTS
[2004) 2 S.C.R.
A Industrial Disputes Act. (980-F]
4.3. It is proved by the appellant that the decision of the Industrial
Tribunal is wrong and without jurisdiction or in excess of it. The Court
has jurisdiction to render justice to the wronged party and set aside the
Award of the Industrial Tribunal. The Court has jurisdiction and power
B to interfere with the award of the Industrial Tribunal. [980-G]
Union of India v. Tarachand Gupta and Bros., (1971] l SCC 486;
Anisminic Ltd. v. The Foreign Compensation Commissioner, (1969) l All ER
208; Cellular Operators Association of India and Ors. v. Union of India and
C Ors., [2003] 3 SCC 186; Ebrahim Aboobakar and Anr. v. Custodian General
of Evacuee Property, [1952] SCR 696; Dharangadhara Chemical Works Ltd.
v. State ofSaurashtra, [1957) SCR 152; Syed Yakoob v. K. S. Radhakrishnan
and Ors., [1964) 5 SCR 64; Parry and Co. Ltd. v. P. C. Pal and Ors., [1969]
2 SCR 976; Ouseph Mathai and Ors. v. M Abdul Khadir, (2002] l SCC 319
and Fuel Injection Ltd v. Kamgar Sabha, (1978) l SCC 156, referred to.
D
5.1. The Courts below have nowhere estimated the financial burden
that would result from its judgement. This is an omission that is fatal to
the legality of the order impugned. The appellant Company is now covered
by Section 23 of the Sick Industrial Companies (Special Provisions) Act,
1985 and has become a 'Potentially Sick Industrial Company' as defined
E thereunder. [988-F-G]
Ahmedabad Mill Owners Association v. The Textile Labour Association,
[1966] l SCR 382, referred to.
5.2. None of the courts below have admitted to estimate/compute the
F total wage packets resulting from their awards/judgement for any of the
categories of employees. This is a fatal omission in the award/judgement.
The basic pay and increment structure was found to be higher than in
comparable concerns. However, the courts below have left it unremedied.
While doing so, the courts below totally ignored the cascading effect of
G high basic wage and dearness allowance not only on Provident Fund,
Gratuity and Superannuation but on other items of emoluments too.
(985-E, F; 986-A-C]
6. The time-tested system and practice of allowances linked to grades
has been changed by the Award. For decades in the pre-Award period,
H allowances like House Rent Allowance, Leave Travel Allowance etc were
MUKAND LTD. 1·. MUKAND STAFF AND OFFICERS' ASSON. [LAKSHMANAN, J.] 957
higher for the higher grades and there were thus financial benefits of A
promotions when the employee promoted from the lower to the higher
grades and entrusted with higher responsibilities. Under the Award of the
Industrial Tribunal, the allowances are linked to basic pay and are delinked from the grades. There is no application of mind or any discussion
on analysis or any reason adduced in support of the above-mentioned
change in the time-tested system and practice .mywhere in the Award/ B
Judgement of the courts below. As a result, financial benefits arising from
promotions are rendered nugatory- in fact, the Award has virtually
abolished the financial benefits on account of promotions.
(986-G-H; 987-A-B] c
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5601 of
2001.
From the Judgment and Order dated 26.4.2001 of the Bombay High
Court in A.No. 194 of 2000.
WITH
C.A.Nos. 7340-7341 of 200 I.
. Ashok H. Desai, P.K. Rele, Hitesh Buch, Ms. Anima Kapadia, K.P.K.
D
Nair, Ms. Indu Malhotra, Ms. Ruchi Khurana, Ms. Shilpi Srivastava and Ms. E
V. Deepa for the Appellant.
K.K. Singhvi, Sanjay Singhvi, B.N. Singhvi andVinay Kumar Garg for
the Respondent.
The Judgment of the Court was delivered by
DR. AR. LAKSHMANAN, J. The present case raises an important
issue of vital public importance, namely, whether the Industrial Tribunal was
justified in adjudicating upon the service conditions of employees, who are
not "workmen" under the Industrial Disputes Act, 1947 and are hence clearly
outside its jurisdiction.
Civil Appeal No. 5601 of 2001 was filed by the appellant-Company
against the common final judgment and order of the Division Bench of the
High Court of Judicature at Bombay in Appeal No. 194 of 2000. The said
appeal was filed by the Company against the judgment dated 01.12.1999 of
F
G
the learned single Judge in Writ Petition No.1705 of 1998 which was filed H
958
SUPREME COURT REPORTS
[2004) 2 S.C.R.
A by the Company against the award of the Industrial Tribunal in Reference
being Reference (IT) No. 3 of 1993 which arose out of the demands of the
respondent-Union.
Civil Appeal Nos. 7340 and 7341 of 200 l were filed by the Union
against the judgment and order in Appeal No. 441 of 2000 which was filed
B by the Union impugning the judgment dated 01.12.1999 of the learned single
Judge in Writ Petition No. 1705 of 1998 by which the single Judge had
reduced the extent of dearness allowance granted under the award of the
Industrial Tribunal.
We shall take Civil Appeal No. 5601 of 2001 filed by the Company
C against the judgment and order of the Division Bench for consideration and
the decision taken on this appeal will also govern the other two appeals filed
by the Staff and Officers' Association in Civil Appeal Nos. 7340 and 7341
of 2001.
D
The appellant-Company concluded a Settlement with the respondentAssociation on 14.08.1974 whereby welfare scheme for the staff and officers,
jointly funded and managed by the Company and the Association did not
create any condition of service. The Company concluded a settlement on
09 .06.1982 covering service conditions of all staff and officers including
those in Grades 01 and 00. According to the Management, this was a unique
E settlement in that at the instance the Chairman and Managing Director of the
Company, the Association determined for itself and recommended the quantum
of increase in emoluments for the staff and officers which the Company
accepted and implemented through the said settlement. On 24.02.1989, the
appellant-Company concluded a Settlement with the respondent-Association
F which stated, inter a/ia, that "It is the Company's contention that a substantial
number of the staff, not being 'workmen' under Section 2(s) of the Industrial
Disputes Act, 1947 (hereinafter referred to as 'the Act') are not covered by
the provisions of the Act. Without prejudice to the rights and contentions of
both the parties with regard to the applicability of the provisions of the Act,
the parties have reached a comprehensive Settlement covering in addition to
G the demands made in the said 'Charter of Demands'' the issue of annual
bonus as well, under Section 12(3) and 18(3) of the Act read with Rule 62
of the Industrial Disputes (Bombay) Rules, 1957 in conciliation proceedings
on the following terms".
"This Settlement did not cover employees in Grade 01 and 00 who
H
are General Foremen or Senior Officers and Asstt. General Foremen
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MUKAND LTD. i·. MUKAND STAFF AND OFFICERS' ASSON. [LAKSHMANAN, J.] 959
or Officers".
A
On 04.11.1991, the respondent-Association served a Charter of Demands
on the Company. Failure report was submitted by Conciliation Officer on
31.10.1992. The Government of Maharashtra, by its Order dated 17.02.1993,
referred the dispute for adjudication to the Industrial Tribunal. The text of the
Order issued by the Government of Maharashtra is reproduced below:
B.
"ORDER
Industrial Disputes Act, 1947:-
No. ADM 3092/2i867/CR 2001/Lab-3. - Whereas the Government C
of Maharashtra has considered the report submitted by the conciliation
Officer under sub-section (4) of section 12 of the Industrial Disputes
Act, 194 7 (XIV of 194 7), in respect of the dispute between Mis.
Mukand Ltd., L.B.S. Marg, Kur/a, Bombay 400 070 and the workmen
employed under them, over the demands mentioned in the schedule
appended hereto.
D
And whereas the Government of Maharashtra after considering
the aforesaid report is satisfied that there is a case for reference to the
dispute to an Industrial Tribunal.
Now, therefore, in exercise of the powers conferred by clause (d) E
of sub-section (I) of section 10 read with sub-section (5) of section
12 of the Industrial Disputes Act, 194 7, the Government of
Maharashtra hereby refers the said dispute for adjudication to an
Industrial Tribunal, Bombay consisting of Shri G.S. Baj, Member
constituted under Government Notification, Industries, Energy and
Labour Department, No. IDA 0392/CR 69/Lab-3, dated the 31st F
March, 1992."
The respondent-Association filed its Statement of Claims. The appellantCompany filed its written statement setting out in detail how the demands
raised by the respondent-Association, which according to them, were
unreasonable and pointing out that the financial position of the Company was G
not sound. It was also pointed out that barring a few categories of employees,
the bulk of employees were not 'workmen' as defined under the Act and that
the Industrial Tribunal had no jurisdiction to grant any relief to the employees
who are not .'workmen' under the Act.
The Tribunal, by its Part-I Award, directed an ad hoc payment of H ·
960
SUPREME COURT REPORTS
[2004] 2 S.C.R.
A Rs.500 per month to all employees in grades 12-00. The appellant-Company
on its own effected an additional ad hoc payment in varying amounts gradewise to employees in grades 00-09. The Tribunal, by its interim Award Partll, directed payment of employees on. the basis of basic pay slab ad hoc
. amount ranging from Rs. 375 to Rs. 1050 per month to employees who had
not been granted additional ad hoc payment by the appellant- Company. The
B High Court, by its judgment and order dated 27.01.1996 in Writ Petition No.
342 of 1996 filed by the company against the said Awards, directed the
Company to deposit the amou_nts payable under the interim Award Part-II in
the Provident Fund Accounts of the concerned employees instead of disbursing
the same to them, and directed the Tribunal to dispose of the Reference on
. C or before 30.04.1996.
D
E
F
On 11.12.1995, the appellant-Company and the respondent-Association
concluded a Settlement on annual bonus for four years, without prejudice to
their respective rights and contentions as stated in Clause 1 of the said
settlement which stated as under:
"It is the Company's contention that ·a majority of the staff, on the
one hand and the officers on the other are not 'Workmen' under
Section 2(s) of the Industrial Disputes Act, 1947 and are also not
covered by the provisions of The Payment of Bonus Act, 1965. These
contentions of the Company are not, however, accepted by the
Association. In the circumstances, it is agreed that this Settlement
shall not be cited by either party as evidence of waiver of the
contentions of the other and that both the parties shall continue to be
at liberty to raise their respective contentions on these issues on all
fora."
An affidavit by the Vice-President of the Company - Mr. Krishnan Nair
was also filed before the Tribunal affirming the designations and categories
of employees of the appellant-Company who are not "workmen" under the
Act. The Tribunal pa;sed an award on 26.03.1998 and held that the appellant
was purportedly estopped from contending that the employees were not ·
G workmen under the Act and granted all the major demands, including revision
in basic salaries, dearness allowance, etc. in toto and rejected certain demands
like computer allowance, shift allowance also in toto. According to the
appellant, the Award was far in excess of the appellant's fil!ancial capacity
and the same ignored the well-settled industry-cum-region principle and the
-status of the employees before him.
H
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MUKAND LTD. r. MU KAND STAFF AND OFFICERS' ASSON. j LAKSHMANAN. J J 961
Being aggrieved by the Award of the Industrial Tribunal, the appellant A
filed Writ Petition No. 1705 of 1998 before the High Court at Bombay. The
High Court issued rule and granted conditional stay subject to the condition,
inter alia, that the petitioner- Company pays to the employees 50% of the
increased salary and allowances awarded by the Tribunal, in addition to the
existing salary and allowances with effect from the date of publication of the B
Award, and that in case it is held ultimately that the said employees were not
entitled to the payments so made, the amount shall be adjusted by the appellant
in future wages.
Learned single Judge passed another Order on the same date in the
Company's Writ Petition No. 1704of1998 against another Award passed by C
another Tribunal in Reference (IT) No. 70of1998 relating to the Company's
daily-rated workmen at its factory at Kurla while admitting the said writ
petition, directing the Company to pay to the said daily-rated workmen 50%
of the increase in the allowances granted by the said Award except certain
allowances specified therein. The appellant filed an appeal before the Division
Bench against the said interim order dated 05.10.1998. The appeal was D
disposed of stating that the said order was a discretionary order and did not
warrant any interference at the interim stage. The Association filed contempt
petition in the High Court on the ground that the Company was deducting
from retrial benefits of the employees the amount that were paid to them
under the interim order dated 05.10.1998. By its order dated 19.02.2000 in E
the said petition, the Company was directed to deposit in the High Court a
sum of Rs. 9,52,205 recovered thus from the employees.
The Vice President of the Company filed an affidavit before the learned
single Judge on 24.06.1999 whereby he placed on record the facts on the
financial position of the Company. The affidavit affirmed, inter a/ia, the fact p
that CRISIL progressively down-graded the Company's financial standing
and that by its letter dated 01.04.1999, the said credit rating agency further
down-graded the Company's rating from "BBB_" to "BB" and further that
the said down-graded followed the down-grading done earlier as under:-
Year
Year
Rating
Rating
I995AA 1996AAYear
Rating
1997A+
Year
Year
Rating
Rating
1998BBB+ 1999 BB
G
The said letter from CRISIL showed that the rating "AA" indicated
"high safety", while "BB" indicated "Inadequate Safety". The rating as
above showed that the Company had been down-graded by as many as 9 H
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SUPREME COURT REPORTS
(2004] 2 S.C.R.
A notches between 1995 and 1999.
·On 01.12.1999, the learned single Judge passed judgment and order
modifying the impugned Award and held that there was community of interest
between the workmen and non-workmen as they worked and functioned in
the same grades and that the Company had concluded Settlements covering
B both categories of employees in the past, and further that in the facts of the'
case, the workmen could espouse the cause of the non-workmen. The learned
single Judge disallowed the granting of one component of D.A. viz., basic
linked variable D.A. He confirmed all other increases in emoluments granted
by the Tribunal. The Review Petition filed by the Association against the
C judgment of the learned single Judge was also rejected by Order dated
15.02.2000. Both the appellant and the respondent preferred separate appeals
challenging the judgment of the learned single Judge. In the appeal, the
Company filed its Annual Report for the year 1999-2000 which reported a
profit of Rs. 5.85 crores but showed that when capital profits i.e. profits from
sale of land and of shares owned by the Company in other companies are
D excluded, there was, in fact, a loss amounting to Rs. 9.45 crores. The Company
also submitted statements relating to basic pay etc. to the Division Bench
during the course of hearing. According to the appellant-Company, they
suffered a loss of Rs. 40 crores during the financial year 2000-0 l as per the
audited financial results and a· chart showing the financial position of the
E Company from 1991-92 to 2000-01 was also filed.
The Division Bench passed its judgment partially modifying the learned
single Judge's Order by reducing (i) one of the 3 components of Dearness
Allowance granted by the Tribunal viz. the D.A. fixed in terms of percentages
of basic pay, grade-wise (ii) the number of service increments; (iii) the gratuity
F from 21 days to 15 days; and (iv) by changing the effective date for increase
in emoluments from 17.02.1993 to 01.01.1996. The Division Bench affirmed
the decision of the learned single Judge on all other points. The Order casts
as retrospective burden of approximately Rs. 35 crores upto March, 200 l and
prospective gross burden of Rs. 7 crores per annum.
G
As already stated, the special appeals were filed against the common
judgment by the respective parties. According to counsel for the appellant,
the High Court has failed to correct the jurisdictional error in granting revision
of the service conditions of employees who are admittedly not 'workmen'
under the Act on the ground, inter a/ia, of community of interest and also the
H error in granting revision of service conditions of employees in breach of
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MUKAND LTD. 1·. MUKAND STAFF AND OFFICERS" ASSON. [LAKSHMANAN. J. J 963
established principles of wage adjudication. This Court granted leave to appeal A
to both parties and directed the appellant-Company not to make any recovery
from the employees of the amounts paid on the basis of the interim Awards
passed by the Tribunal or by the High Court. We have heard Mr. Ashok H.
Desai, learned senior counsel appearing for the appellant-Company and Mr.
K.K. Singhvi, learned senior counsel appearing for the respondent - Staff and B
Officers' Association. Both the learned counsel advanced lengthy arguments.
In support of their contentions, they invited our attention to the various
documents and records filed before the Industrial Tribunal, before the High
Court and before this Court and also relied on many rulings of this Court.
In assailing the award and of the judgment of the High Court, Shri C
Ashok H. Desai, learned senior counsel appearing for the Company, made
the following submissions:-
(i)
(ii)
(iii)
(iv)
The Reference is limited to the dispute between the appellantCompany and the 'workmen' employed by them.
The Tribunal, being a creature of the Reference, cannot adjudicate D
matters not within the purview of the dispute actually referred to
it by the order of Reference.
There are no pleadings by the respondent-Staff and Officers'
Association regarding 'community of interest' or 'estoppel'.
E
The High Court and this Court have the jurisdiction and the power
to interfere with the award of the Tribunal.
(v) The phrase "any person" in Section 2(k) and Section 18 of the
Act does not include 'non-workmen'.
(vi) The finding of the Court below that there is' community of interest' F
between the 'workmen' and the 'non-workmen' is based on
misconstruing of evidence and disregarding of vital facts.
(vii) The 'non-workmen' cannot be given the status and protection
available to the 'workmen' under the Act.
(viii)Estimation/computation of the total wage packet, which is a vital G
task in wage adjudication, has not been done by any of the Courts
below.
(ix) Financial burden of the award passed by the Tribunal is wrongly
assessed by the Tribunal, as observed by the learned single Judge;
however, neither the learned single Judge nor the Division Bench H
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SUPREME COURT REPORTS
[2004] 2 S.C.R.
assessed the burden of their own judgment and order. The omission
is fatal to the legality of the impugned order.
(x) The industry-cum-region principle has not been followed nor have
the comparisons be made in accordance with the well-settled law.
(xi) Assessment of the appellant-Company's financial capacity by the
Courts below is riddled with serious errors.
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(xii) The subsequent developments relating to the financial position of
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the appellant-Company need to be kept in mind.
(xiii)The award, after its infirmities are cured, should be made
applicable only to the 'workmen' and not to the 'non-workmen'.
(xiv)The appellant-Company, however, undertakes to ensure that the
total wage packets of the 'non-workmen', to whom the award
further modified as above will not be applicable, ar~ not lower
than the total wage packets available to the 'workmen' under the
said award.
The above submissions were sought to be countered on behalf of the
respondent-Staff and Officers' Association. Mr. K.K. Singhvi, learned senior
counsel appearing for the Staff and Officers' Association submitted that
essentially there was no revision of basic wages from 1972 and only ad-l:zoc
E increases had been granted from time to time of the special pay and allowances.
F
G
H
There was thus an urgent and pressing need for wage revision. He made the
following submissions:-
(i)
It is submitted by the respondent-Staff and Officers' Association
that the decision of the Tribunal, on a question of fact, which it
has jurisdiction to determine, is not liable to be questioned in
proceedings under Article 226 of the Constitution of India unless
at the least it is shown to be fully unsupported by the evidence.
He cited the judgments of this Court in the following cases:
(a) Ebrahim Aboobakar and Anr. v. ·Custodian General of
Evacuee Property, [1952] SCR 696 at 702 (Five Judges)
(b) Dharangadhara Chemical Works Ltd v. State ofSaurashtra,
[1957] SCR 152 (Four Judges)
. (c) Syed Yakbob v. K.S. Radhakrishnan and Ors., [1964] 5 SCR
64 (Five Judges)
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MUKAND LTD.'' MUKAND STAFF AND OFFICERS' ASSON. [LAKSHMANAN, J.] 965
(d) Parry and Co. Ltd. v. P.C. Pal and Ors., [1969] 2 SCR 976 A
(three Judges)
(e) Ouseph Mathai and Ors. v. M Abdul Khadir, [2002] I SCC
3 I 9 (Two Judges)
(ii) This Court while exercising its power under Article 136 of the B
Constitution of India in an appeal from the judgment of the High
· Court rendered in exercise of its power under Articles 226 and
227 of the Constitution of India will exercise the same power
which the High Court could exercise and will not interfere with
the finding of fact recorded by a Tribunal. The following decisions
were cited in the cases of Parry and Co. Ltd. v. P.C. Pal and C
Ors., (supra) and Fuel Injection Ltd. v. Kamgar Sabha and Anr.,
[1978] l SCC 156 for this proposition.
(iii) While exercising powers under Article 226 of the Constitution of
India, for issuance of a writ of certiorari or any other writ against
an award of Industrial Tribunal, the High Court will normally not D
take into consideration facts arising subsequent to the date of the
award.
(iv) The Industrial Tribunal by its award raised the necessary issues in
regard to the financial soundness of the Company to bear the
burden and recorded the finding in favour of the Staff and Officers' E
Association.
(v) The Industrial Tribunal also recorded the finding that the charts
regarding the financial position of various comparable companies,
which were prepared on the basis of the information submitted by
the witnesses of the Company, will have to be believed and p
considered.
(vi) The findings of the Industrial Tribunal were based on the evidence
on record and the High Court ought not to have interfered with
those findings. It was submitted that the learned single Judge has
erred in interfering with the DA Scheme framed by the Industrial G
Tribunal and that the learned single Judge did not compare the
total wage packet of Mukund with the comparable concerns. The
Division Bench had exceeded its jurisdiction and take into account
event subsequent to the passing of the award and secondly, in
confirming the reduction in DA made by the learned single Judge.
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SUPREME COURT REPORTS
(2004] 2 S.C.R.
The Industrial Tribunal having exercised its discretion and having
deprived the workmen of the benefit of the award from 1.1.1992 .,
to 17.2.1993, there was no reason whatsoever for the High Court
to interfere with the discretion of the Tribunal. Though the learned
single Judge confirmed that finding, but the Division Bench
without any reason whatsoever interfered with the said discretion
and deprived the workmen the benefit of the revision in service
conditions for four years. The Division Bench completely lost
sight of the fact and effect that the emplOyees who had retired or
had ceased to be in service of the company between 1.1.1992 to
1.1.1996 would not only not get any benefit under the award but
such of them who had retired or had ceased to be in service after
19 .1.1994 wil 1 have to refund the benefit they got under the interim
awards granted on 19.1.1994 and 18.9.1995.
(vii) The Division Bench also erred in interfering with the Gratuity
Scheme granted by the Industrial Tribunal and confirmed by the
D
learned single Judge of the High Court. Arguing further, the
learned senior counsel would submit that the Industrial Tribunal
took into consideration the factthat the daily-rated workers of the
Company at the Kalwe Plant, as per agreement dated 15.2.1994,
were entitled to Gratuity of 21 days and, therefore, had granted
E
F
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Gratuity of 21 days' basic + DA to the staff concerned in the
reference. The learned single Judge confirmed the said finding.
However, the Division Bench interfered with the finding on the
ground that the Gratuity Scheme at Kalwe Plant was on the basis
of minimum attendance whereas the award gave a flat rate of
Gratuity of 21 days to all the employees.
(viii) The Division Bench erred in interfering with the service increments
given by the Industrial Tribunal. It interfered with the service
increments only on the ground that they thought it approp~iate to
restructure the increments.
(ix) The Company should not be allowed to rely on documents which
are not part of the Record. It is to be noted that the Company has
filed an application for bringing additional documents on record
to show that the financial condition of the Company had
deteriorated after passing of the award. It was submitted by the
learned counsel that subsequent events are not at all relevant for
the purpose of assailing the award, but may be relevant if and
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MUKAND LTD. 1· MU KAND l>T/\tF AND OFFICERS. ASSON. [LAKSHMANAN. J.] 967
when demands are made either by the workmen or the Company A
and when demands are made either by the workmen or the
Company for subsequent period and a Reference in that regard is
given by appropriate Government. It was, therefore, submitted
that the application for bringing on record the additional documents
be rejected. According to him, there are no operating losses, but B
the losses are mainly on account of the interest on borrowing for
huge investments made in associate/subsidiary/group companies
and for the expansion of the steel making capacity by setting up
a new project at Hospet.
Learned senior counsel appearing for the respondent-Staff and Officers' C
Association made additional submissions on behalf of the workmen. Regarding
the financial clause contained the Statute, he has made further submissions
reiterating the submissions made earlier.
We shall now analyse the submissions made by the learned senior
counsel appearing on either side with reference to the pleadings, documents, D
records and also with reference to the judgments cited.
The Reference is limited to the dispute between the Appellant-Company
and the 'workmen' employed by them.
We have already referred to the order of Reference dated 17 .2.1993 in E
paragraph supra. The dispute referred to by the order of Reference is only in
respect of workmen employed by the appellant-Company. It is, therefore,
clear that the Tribunal, being a creature of the Reference, cannot adjudicate
matters not within the purview of the dispute actually referred to it by the
order of Reference. In the facts and circumstance of the present case, the
Tribunal could not have adjudicated the issues of the salaries of the employees F
who are not workmen under the Act nor could it have covered such employees
by its award.